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Clearinghouse loan certificates as a lender of last resort |
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| Institution: | 1. HEC Sousse, University of Sousse, Tunisia;2. HEC Sousse, LaREMFiQ Laboratory, University of Sousse, Tunisia;1. University of Louisiana at Lafayette, B.I. Moody III College of Business, Department of Economics & Finance, 214 Hebrard Boulevard, Moody Hall 253, P.O. Box 44570, Lafayette, LA 70504-4570, United States;2. Department of Economics, School of Business and Economics, Wilfrid Laurier University, 75 University Avenue West, Waterloo, ON N2L 3C5, Canada |
| Abstract: | Looking across multiple panics of the nineteenth and twentieth centuries, this paper treats borrowing of clearinghouse loan certificates as borrowing from a lender of last resort. We evaluate individual bank use of clearinghouse loan certificates in New York City using bank balance sheet data. Bank capital ratios do not predict positive net borrowing. Lower pre-panic reserve ratios increased the probability of positive net borrowing of loan certificates. Bank borrowing behavior from a lender of last resort remained relatively constant across all three crises considered. |
| Keywords: | Bank Lender of last resort Clearinghouse Loan certificates |
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