Dating the Lender of Last Resort

Bibliographic Data

ID9709325
AuthorsKilian Rieder (0000-0003-2175-7611, Oesterreichische Nationalbank (Eurosystem), Austria & Centre for Economic Policy Research (CEPR) , UK, corresponding author), Michael Anson (Bank of England), David Bholat (Formerly Bank of England , UK), Ryland Thomas (Bank of England)
Year2023
Volume133
Issue652
Pages1657-1676
Publication date2023-04-07
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueThe Economic Journal (JOURNAL)
Journal identifiersISSN: 0013-0133 • E-ISSN: 1468-0297
PublisherOxford University Press (PUBLISHER • GB)
DOI10.1093/ej/ueac089
OpenAlexW4312120368
LanguageEN
Citations received4
References cited39

We exploit a fixed rule constraining central bank credit provision in a regression discontinuity framework to analyse counterparties’ behavioural responses to the (non-)receipt of liquidity during a crisis. In spring 1847, the Bank of England suddenly started rationing credit to avoid violating its gold reserve requirement. We show that counterparties that suffered rejection from the Bank were more likely to fail. Conditional on survival, rationed counterparties learned from their experience and changed their behaviour during a subsequent panic in fall 1847: they came to the discount window more often, but submitted smaller requests and relied less on central bank liquidity overall

Bank failure · Bank run · Business · Central bank · Economics · Exploit · Financial system · Lender of last resort · Market liquidity · Monetary economics · Monetary policy · Receipt · Accounting · Banking stability, regulation, efficiency · Islamic Finance and Banking Studies · Monetary Policy and Economic Impact

Tools

Open DOI