Scandinavian Working Papers in Economics
Lund Papers in Economic History,
Lund University, Department of Economic History
No 256: Banks and the Economy: Evidence from the Irish Bank Strike of 1966
Jason Lennard, Seán Kenny () and Emma Horgan
Additional contact information
Jason Lennard: London School of Economics
Seán Kenny: University College Cork, Queen's University Centre for Economic History, and Lund University, Postal: Department of Economic History, Lund University, Box 7083, S-220 07 Lund, Sweden
Emma Horgan: University College Cork
Abstract: This paper studies a natural experiment in macroeconomic history: the Irish bank strike of 1966, which led to the closure of the major commercial banks for three months. We use synthetic control to estimate how the economy would have evolved had the strike not happened. We find that economic activity slowed, deviating by 6% from the counter- factual path. Narrative evidence not only supports this finding, but also depicts the struggles of households and firms managing a credit crunch, a liquidity shock, and rising transaction costs. This case study highlights the importance of banks for economic performance.
Keywords: banks; Ireland; macroeconomy; post-war
JEL-codes: E32; E44; G21; N14; N24
Language: English
49 pages, January 29, 2024
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