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QUEEN’S BUSINESS SCHOOL ECONOMICS SEMINAR SERIES

Friday 30^th January

3pm

“Banks and the Economy: Evidence from the Irish Bank Strike of 1966”

University College Cork

Abstract

This paper studies the economic impact of the 1966 Irish bank strike, an event which removed banking services from the economy for three months. Using newly assembled quarterly GDP estimates, monthly macroeconomic indicators, and detailed sectoral data, it shows that the strike coincided with a significant slowdown in economic activity. Comparisons with contemporaneous forecasts reveal large negative forecast errors in output, consumption, and especially investment, indicating a substantial adverse shock. The contraction was front-loaded, with industry and agriculture particularly affected, and evidence points to binding liquidity and credit constraints rather than widespread job losses. Bank balance sheet data further suggest that the strike had lasting effects, as banks adopted more conservative post-strike behaviour. Overall, the paper highlights how temporary disruptions to banking can generate significant and persistent real economic costs.

QBS Conference Hub, Seminar Room 01.012