On April 2nd (Wednesday), from 13h00 to 14h00, ISEG's Amphitheater 3 (Quelhas Building, 4th Floor) will host another session of the 2nd Semester of the ISEG Research Seminars.
This seminar's speaker will be Angelo Riva, from the Paris School of Economics, which will present the paper 'Flight-to-Safety and The Real Effects of Bank Runs: Evidence from the French Great Depression, which abstract can be found below.
The 2nd Semester Research Seminars will be held weekly up until 4 June and will feature members of ISEG's faculty, as well as from other Portuguese and international universities. Further information HERE.
Free admission.
Abstract
We examine how safe assets can amplify financial instability and thus deepen economic crises. During the 1930-1931 French banking crisis, deposits flowed from unregulated commercial banks to government-backed Caisses d'Épargne (CEs), which invested exclusively in government debt. Geographic variation in CE density, rooted in 19th century establishment patterns, was unrelated to pre-crisis economic and banking growth rates. However, areas with higher CE densities experienced more bank branch closures during the crisis. The flight-to-safety thus led to local credit supply shocks. Using CE density as an instrument, we show that this flight-to-safety significantly reduced local aggregate income.