This research consists of three essays, each concerning the relationship between economic conditions and commercial bank failures. In the first essay, we use annual macroeconomic time series for the period 1900--1996 to analyze the effects of economic conditions on commercial bank failures in the United States. This analysis involves a weighted least squares method, using the probability of bank failures as the dependent variable. The regression sheds light on almost 100 years of bank failures and macroeconomic activity,;The second essay employs a cross section time series regression analysis for the 48 states, in order to examine the effects of depressed local and national economic conditions on bank failures by states. In this essay, we employed annual state level and national macroeconomic time series variables for the period 1929--1995. The analysis of bank failures by state is of interest because it sheds light on the hypothesis that bank failure rates on the average are usually higher in agriculture and energy dependent states than in others.;The third essay uses annual macroeconomic time series to compare the huge bank failures in the Great Depression of the 1930s with the failure rates of the 1980s. This essay argues that adverse economy-wide shocks preceded bank failures in both eras. The third essay estimates two equations for the periods 1900--1945 and 1960--1996, representing the eras of the Great Depression and the 1980s respectively. The two estimates examine the role played by the severe economic conditions in these two historical periods of high bank failures. Further, this essay employs a vector autoregression (VAR) system, impulse response functions, variance decompositions, and the Granger-causality tests to shed light on the direction of the causality between depressed economic activity and commercial bank failures. The Granger-causality tests for the periods of the Great Depression and the 1980s indicate that the causality runs from economic conditions to bank failures and not the other way. This result support our hypothesis that poor economic conditions are significant factors, in explaining commercial bank failures.
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