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

Abstract

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

Morelli, Salvatore, Banking Crises in the US: The Response of Top Income Shares in a Historical Perspective (Aprli 28, 2014). CSEF working paper series, #359, Available at SSRN: https://ssrn.com/abstract=2388597 or http://dx.doi.org/10.2139/ssrn.2388597

Salvatore Morelli (Contact Author)

The Graduate Center - CUNY ( email )

695 Park Avenue
New York, NY 10021
United States

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