Stigma (botany)

Macroeconomics

Great Depression

Financial system

Psychiatry

Economics

Business

Keynesian economics

Psychology

Political science

Medicine

Finance

Financial crisis

Journal of Financial Economics

How should regulators design effective emergency lending facilities to mitigate stigma during a financial crisis? I explore this question using data from an unexpected disclosure of partial lists of banks that secretly borrowed from the lender of last resort during the Great Depression. I find evidence of stigma in that depositors withdrew more deposits from banks included on the lists in comparison with banks left off the lists. Overall, the results suggest that an emergency lending facility that never reveals bank identities would mitigate stigma.

Managing stigma during a financial crisis