The Founding of the Federal Reserve, the Great Depression and the Evolution of the U.S. Interbank Network

Matthew S. Jaremski, David C. Wheelock

NBER Working Paper No. 26034
Issued in July 2019
NBER Program(s):Development of the American Economy

Financial network structure is an important determinant of systemic risk. This paper examines how the U.S. interbank network evolved over a long and important period that included two key events: the founding of the Federal Reserve and the Great Depression. Banks established connections to correspondents that joined the Federal Reserve in cities with Fed offices, initially reducing overall network concentration. The network became even more focused on Fed cities during the Depression, as survival rates were higher for banks with more existing connections to Fed cities, and as survivors established new connections to those cities over time.

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Document Object Identifier (DOI): 10.3386/w26034

Published: Matthew Jaremski & David C. Wheelock, 2020. "The Founding of the Federal Reserve, the Great Depression, and the Evolution of the U.S. Interbank Network," The Journal of Economic History, vol 80(1), pages 69-99. citation courtesy of