Banking Crises in the US: The Response of Top Income Shares in a Historical Perspective
CSEF working paper series, #359
70 Pages Posted: 1 May 2014
Date Written: Aprli 28, 2014
This paper examines the response of the national income shares accruing to different groups within the richest decile in the US to the occurrence of major systemic banking crises since the beginning of the twentieth century. The findings suggest that the impact of banking crises on the US top income shares is mostly small in magnitude. Indeed, the estimated total effect of crises is never bigger than one standard deviation of a specific top shares under investigation. Results are robust to a variety of checks and the analysis also highlights interesting heterogeneity across different income groups. Additional results also point out that the short-term impact of crises may be also temporary in nature as top shares recover faster in the aftermath of a shock. These findings lend indirect support to the idea that only substantial changes in government policies and institutional frameworks can bring about radical changes in income distribution.
Keywords: top income shares, Systemic banking crises, stock market crises, income distribution
JEL Classification: D31, D39, E32, E37
Suggested Citation: Suggested Citation