The Effects of Banking Competition on Growth and Financial Stability: Evidence from the National Banking Era

Carlson, Mark A.; Correia, Sergio; Luck, Stephan

doi:10.2139/ssrn.3202489

Cited by 22 publications

(19 citation statements)

References 63 publications

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“…Previous research has shown that there is a strong relationship between local economic activity and the condition of the financial sector (e.g. Rajan and Zingales 1998, Petersen and Rajan 2002, Guiso, Sapienza, and Zingales 2004, Gilje 2017, and more recently in a historical context Carlson, Correia, and Luck 2019, Ziebarth 2013and Lee and Mezzanotti 2014. We provide direct evidence on how the condition of financial markets may also shape the recovery from a shock.…”

Section: Introductionmentioning

confidence: 99%

Capital Destruction and Economic Growth: The Effects of Sherman's March, 1850-1920

Feigenbaum¹,

Lee²,

Mezzanotti³

2018

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Using General William Sherman's 1864--65 military march through Georgia, South Carolina, and North Carolina during the American Civil War, this paper studies the effect of capital destruction on short-and long-run local economic activity, and the role of financial markets in the recovery process. We match an 1865 US War Department map of Sherman's march to county-level demographic, agricultural, and manufacturing data from the 1850-1920 US Censuses. We show that the capital destruction induced by the March led to a large contraction in agricultural investment, farming asset prices, and manufacturing activity. Elements of the decline in agriculture persisted through 1920. Using information on local banks and access to credit, we argue that the underdevelopment of financial markets played a role in weakening the recovery. * We thank

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Section: Introductionmentioning

confidence: 99%

Capital Destruction and Economic Growth: The Effects of Sherman's March, 1850-1920

Feigenbaum¹,

Lee²,

Mezzanotti³

2018

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“…A closely related strand of the literature has analyzed the importance of commercial banks for the development of the American economy (Calomiris 1995;Rousseau and Sylla, 2005). Most recently, Jaremski (2014) has documented that counties with greater bank entry under the National Banking Acts experienced greater industrialization, and Fulford (2015) has shown that rural counties just above the population level needed to sustain the presence of a national bank experienced greater agricultural production (see also Carlson et al, 2018). This paper advances the literature by analyzing value of relationships between commercial banks and nonfinancial corporations.…”

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confidence: 99%

Banks, Insider Connections, and Industrialization in New England: Evidence from the Panic of 1873

Hilt¹

2018

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for research assistance. The author declares that he has no relevant or material financial interests that relate to the research described in this paper. The views expressed herein are those of the author and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

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“…For instance, Calomiris and Carlson (2017) use detailed information on interbank networks to study the transmission of liquidity risks during the panic of 1893. 4 In addition, Anderson and Bluedorn (2017) use state banking reports to study Pennsylvania state banks' responses during the panic of 1884. 5 We fill this gap by using empirically observed interbank deposit relationships to construct bank networks before and after the NBAs.…”

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confidence: 99%

Bank Networks and Systemic Risk: Evidence from the National Banking Acts

2016

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The National Banking Acts (NBAs) of 1863-1864 established rules governing the amounts and locations of interbank deposits, thereby reshaping the bank networks. Using unique data on bank balance sheets and detailed interbank deposits in 1862 and 1867 in Pennsylvania, we study how the NBAs changed the network structure and quantify the effect on financial stability in an interbank network model. We find that the NBAs induced a concentration of interbank deposits at both the city and bank levels, creating systemically important banks. Although the concentration facilitated diversification, contagion would have become more likely when financial center banks faced large shocks.

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The Effects of Banking Competition on Growth and Financial Stability: Evidence from the National Banking Era

Cited by 22 publications

References 63 publications

Capital Destruction and Economic Growth: The Effects of Sherman's March, 1850-1920

Capital Destruction and Economic Growth: The Effects of Sherman's March, 1850-1920

Banks, Insider Connections, and Industrialization in New England: Evidence from the Panic of 1873

Bank Networks and Systemic Risk: Evidence from the National Banking Acts

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