Economic crisis and the demise of a popular contractual form: Building & Loans in the 1930s

Sebastian Fleitas, Price Fishback, Kenneth Snowden

Research output: Contribution to journalArticlepeer-review

10 Scopus citations


Before the 1930s Building and Loan Associations (B&Ls) were the leading residential mortgage leaders in the U.S. When severely distressed during the housing crisis of the 1930s, B&Ls frequently took years to liquidate. These delays in resolution resulted from the unique B&L contract that encouraged borrowing members to prolong dissolution and gave them shared control over the timing of liquidation. We estimate a hazard model of dissolution using a new dataset of New Jersey B&Ls and find that the probability of liquidation rose 37% when the share of non-borrowing members rose above two-thirds. The severe restriction on liquidity suffered by non-borrowers was instrumental to the rapid transition from the traditional B&L to the modern Savings & Loan industry during the 1930s housing crisis.

Original languageEnglish (US)
Pages (from-to)28-44
Number of pages17
JournalJournal of Financial Intermediation
StatePublished - Oct 2018


  • Great Depression
  • Housing crisis
  • Mortgage
  • Savings and loan

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics


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