hould-Read: Mary Amiti and David Weinstein: Why shocks to large banks cause big GDP swings

Should-Read: Mary Amiti and David Weinstein: Why shocks to large banks cause big GDP swings: “Banks are large relative to the economies they serve…

… [Using] comprehensive data on Japanese banks from 1990 to 2010… the fates of individual banks matter for aggregate performance. Much of the fluctuation in Japanese aggregate investment appears to be driven by the idiosyncratic successes and failures of a limited number of institutions, and there is good reason to believe that the situation is similar in many developed countries…