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Bank failures

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Mongi Bellili
Mongi Bellili

Bank failures during the Depression were caused by a combination of factors, including the 1929 stock market crash, excessive consumerism and business debt, lack of banking regulations, and the Federal Reserve providing little assistance. Over 9,000 banks failed throughout the 1930s, freezing $7 billion in deposits by 1933. The widespread bank failures led to a loss of confidence, reduced consumption, debt deflation, increased unemployment, and exacerbated the economic downturn into a Great Depression.

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Bank failures caused the Depression or the Depression caused banks to fail? By Mongi Bellili
Preview • The causes of bank failures. • The manifestations of the failure. • The effects of the banking system collapse.
The causes of bank failures 1. The market crash. 2. The people Consumerism was built on credit. In 1929, 6 billions of goods are bought on credit. 80% of Americans have no savings. Businesses could not repay their loans. depositors attempted to withdraw their deposits en masse.
The causes of bank failures 3. The government  Effects of money supply, and central banking decisions. No regulations and no insurance. The federal reserve bank gave little help. Ineffective use of the news. 4. The bankers: Involvement in the stock market. No backup money.
The causes of bank failures 5. Complexity: The liquidation of debt could not keep up with the fall of prices. The liquidation increased the value of each dollar owed, relative to the value of declining assets.
The trigger event
The manifestations of the failure 1. The number of failed banks: Throughout the 1930s over 9,000 banks failed. Surviving banks stopped providing loans.
The manifestations of the failure 1. The amount of money lost: By April 1933, around $7 billion in deposits had been frozen in failed banks. 2. The bank owners: Bankruptcy, debt and suicide
The effects of the failure 1. People: Panicked and stayed away from banks. Loss of confidence led to a reduction in consumption. Everyday, 1000 of homes are repossessed.
The effects of the failure 2. Economy: Debt deflation. the demand dropped. Unemployment.
Contents • The causes of bank failures. • The manifestations of the failure. • The effects of the banking system collapse.
Conclusion • A vicious cycle developed. • This self-aggravating process turned a 1930 recession into a 1933 great depression.

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Bank failures

  • 1. Bank failures caused the Depression or the Depression caused banks to fail? By Mongi Bellili
  • 2. Preview • The causes of bank failures. • The manifestations of the failure. • The effects of the banking system collapse.
  • 3. The causes of bank failures 1. The market crash. 2. The people Consumerism was built on credit. In 1929, 6 billions of goods are bought on credit. 80% of Americans have no savings. Businesses could not repay their loans. depositors attempted to withdraw their deposits en masse.
  • 4. The causes of bank failures 3. The government  Effects of money supply, and central banking decisions. No regulations and no insurance. The federal reserve bank gave little help. Ineffective use of the news. 4. The bankers: Involvement in the stock market. No backup money.
  • 5. The causes of bank failures 5. Complexity: The liquidation of debt could not keep up with the fall of prices. The liquidation increased the value of each dollar owed, relative to the value of declining assets.
  • 7. The manifestations of the failure 1. The number of failed banks: Throughout the 1930s over 9,000 banks failed. Surviving banks stopped providing loans.
  • 8. The manifestations of the failure 1. The amount of money lost: By April 1933, around $7 billion in deposits had been frozen in failed banks. 2. The bank owners: Bankruptcy, debt and suicide
  • 9. The effects of the failure 1. People: Panicked and stayed away from banks. Loss of confidence led to a reduction in consumption. Everyday, 1000 of homes are repossessed.
  • 10. The effects of the failure 2. Economy: Debt deflation. the demand dropped. Unemployment.
  • 11. Contents • The causes of bank failures. • The manifestations of the failure. • The effects of the banking system collapse.
  • 12. Conclusion • A vicious cycle developed. • This self-aggravating process turned a 1930 recession into a 1933 great depression.