Using an extensive high-frequency data set, we investigate the transmission of financial crisis specifically focusing on the Panic of 1907, the final severe panic of the National Banking Era (1863-1913).
Before the Panic of 1907, large NYC banks could maintain the call loan market's liquidity during panics, but the rise in outside lending by trust companies and interior banks weakened the influence of the large banks.
The paper examines the New York Clearing House (NYCH) as a lender of last resort by looking at clearing-house-loan-certificate borrowing during five banking panics of the National Banking Era (1863-1913).
We document how the dominant national banks were crucial providers of temporary liquidity during the Panic of 1907 using a new data set on clearing-house-loan-certificate issues in New York City.
