U.S. Banking System in the Great Depression and Great Recession - Differences and Parallels

This diploma thesis is focused on the analysis and comparison of the US banking system during the Great Depression and the Great Recession. It aims to highlight the differences, outline the parallels, and decide which crisis had a greater impact on the soundness of the banking system. The first two chapters are focused on the description of the banking system in the US. These chapters also introduce both crises and the process of development of economic and banking systems during the Great Depression and the Great Recession. In the next chapter a deeper analysis of the Federal Reserve System policies and comparison of its actions during the crises is performed. The data on specific indicators related to banking system is hereby contrasted. The main part of the comparison is focused on the time segments from 1928 until 1934 for the analysis of the Great Depression effects and from 2006 until 2012 for the analysis of the Great Recession effects. At the end, a list of lessons learnt by the regulatory authorities after both crises is presented along with an analytical part regarding their effectiveness. The main hypothesis stated that the Great Depression had more adverse effects on U.S. banking system than the Great Recession. The evidence and research outcomes confirm that banking system has suffered more in 1930s and the system took longer time to recover.