https://macropaperwarehouse.com/authors/sergio-correia/Sergio CorreiaHugo -- gohugo.ioen-ushttps://macropaperwarehouse.com/papers/failing-banks/https://macropaperwarehouse.com/papers/failing-banks/<p>Correia, Luck, and Verner ask a foundational question in banking: why do banks fail? Specifically, they seek to adjudicate between two theoretical views — the solvency view (failures caused by deteriorating asset quality and insolvency) and the bank runs view (failures caused by depositor coordination failure that can bring down otherwise solvent banks) — using the longest micro-level panel of U.S. commercial bank balance sheets assembled to date.</p> <p>The authors construct a panel covering approximately 37,000 distinct banks across two samples: a historical sample of all national banks from 1863 to 1941 (sourced from OCC Annual Reports, digitized via OCR) and a modern sample of all commercial banks from 1959 to 2024 (from FFIEC Call Reports merged with the FDIC failure list). More than 5,000 banks fail across the full sample, with 2,887 failures before 1935 and 2,233 after 1959. The sample spans institutional regimes before and after the Federal Reserve (founded 1913) and the FDIC (founded 1933/1934).</p>