Papers presented by Simone A. Wegge since 2019

2024 Providence, Rhode Island

"Savings Behaviors in a Time of Financial Panics: Evidence from the Depositors of the Emigrant Bank in 1850s New York"

Abstract:

The Emigrant Industrial Savings Bank (EISB) opened its doors in New York City in September 1850. We investigate the EISB depositors, who opened accounts between 1850 and 1858, most of whom were recent famine immigrants from Ireland. The data of the Emigrant Bank provide a valuable opportunity to study the behavior of savers at a time when savings banks were still new. EISB depositors kept their accounts open for an average time ranging from 4.2 to 5.8 years, and depositors who kept their accounts open for shorter periods as well as men made more transactions. High shoe-leather costs put a damper on the number of transactions per account. The shorter duration accounts may have been used more for precautionary and target savings, while savers who kept accounts open longer may have been interested in life cycle saving goals as well. We also look at who saved more and who saved less: multivariate regressions provide evidence that married men who kept their accounts open longer, ran their own business, or worked as peddlers saved more; skilled workers saved less. During the 1850s and 1860s disturbances in the financial markets as well as the Civil War caused financial panics. We examine four different times of heightened uncertainty, with 1854, 1857 and 1869 as panic periods caused by stress in financial markets, and 1861, the year the Civil War started. For all four periods account closures increased, but this action usually lasted less than two months, with business settling down back to normal very quickly. For 1854 and 1857 we find that withdrawals increased percentage-wise even more than account closures. Many depositors were thus vigilant during these times at safeguarding their assets. With time depositors’ confidence in the Emigrant Bank may have increased: even with these stressful periods, the bank never failed.

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