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Finance and Economics Discussion Series
Finance and Economics Discussion Series logo links to FEDS home page A Brief History of the 1987 Stock Market Crash with a Discussion of the Federal Reserve Response
Mark Carlson

Abstract: The 1987 stock market crash was a major systemic shock. Not only did the prices of many financial assets tumble, but market functioning was severely impaired. This paper reviews the events surrounding the crash and discusses the response of the Federal Reserve, which responded in a number of ways to support the operation of financial markets, including the provision of liquidity, in a highly visible fashion.

Keywords: lender of last resort, financial stability, Federal Reserve, stock market crash

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Last update: May 1, 2007