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Scottish Banking before 1845: A Model for Laissez-Faire?

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  • Cowen, Tyler
  • Kroszner, Randall
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    Abstract

    During the "free banking" era in eighteenth- and early nineteenth-century Scotland, there were a number of legal restrictions affecting the evolution of the system. Scottish banking was characterized by restrictions on small-denomination and interest-bearing notes. There were also restrictions inhibiting the development of capital markets and entry into banking. Furthermore, the Bank of England operated as a "shadow" central bank for the Scottish system. These considerations call into question the use of the Scottish banking experience as the appropriate model for laissez-faire and as evidence against the "legal restrictions theory of money" and the "new monetary economics." Copyright 1989 by Ohio State University Press.

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    Bibliographic Info

    Article provided by Blackwell Publishing in its journal Journal of Money, Credit and Banking.

    Volume (Year): 21 (1989)
    Issue (Month): 2 (May)
    Pages: 221-31

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    Handle: RePEc:mcb:jmoncb:v:21:y:1989:i:2:p:221-31

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    Web page: http://www.blackwellpublishing.com/journal.asp?ref=0022-2879

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    Cited by:
    1. Eduardo Levy Yeyati & Alain Ize & Miguel A. Kiguel, 2005. "Managing Systemic Liquidity Risk in Financially Dollarized Economies," IMF Working Papers 05/188, International Monetary Fund.
    2. Richard C.K. Burdekin & Marc D. Weidenmier, . "Circulating Interest-Bearing Currency: An Arkansan Experiment, 1861-1863," Claremont Colleges Working Papers 2003-04, Claremont Colleges.
    3. David Andolfatto, 2005. "On the Coexistence of Money and Bonds," Macroeconomics 0502020, EconWPA.
    4. Kroszner, Randall, 1995. "Free banking : the Scottish experience as a model for emerging economies," Policy Research Working Paper Series 1536, The World Bank.
    5. Iori, Giulia & Jafarey, Saqib & Padilla, Francisco G., 2006. "Systemic risk on the interbank market," Journal of Economic Behavior & Organization, Elsevier, vol. 61(4), pages 525-542, December.
    6. Sánchez-Ballesta, Juan Pedro & Lloréns, Mercedes Bernal, 2010. "Monitoring, reputation and accountability in issuing banks in mid-nineteenth-century Spain," Explorations in Economic History, Elsevier, vol. 47(4), pages 403-419, October.
    7. Alain Ize & Miguel Kiguel & Eduardo Levy Yeyati, 2005. "Managing Systemic Liquidity Risk in Financially Dollarized Economy," Business School Working Papers managsystrisk, Universidad Torcuato Di Tella.
    8. Randall S. Krosner, 1998. "Lessons from a laissez-faire payments system: the Suffolk Banking System, 1825-58 - commentary," Review, Federal Reserve Bank of St. Louis, issue May, pages 117-120.
    9. Michael D. Bordo, 1989. "The Lender of Last Resort: Some Historical Insights," NBER Working Papers 3011, National Bureau of Economic Research, Inc.
    10. Richard C.K.Burdekin & Marc D.Weidenmier, 2002. "Interest-Bearing Currency and Legal Restrictions Theory:Lessons from the Southern Confederacy," Cato Journal, Cato Journal, Cato Institute, vol. 22(2), pages 199-209, Fall.
    11. Ross Levine, 2004. "Finance and Growth: Theory and Evidence," NBER Working Papers 10766, National Bureau of Economic Research, Inc.
    12. Patrice Robitaille, 1997. "Private payments systems in historical perspective: the Banco Central system of Mexico," International Finance Discussion Papers 599, Board of Governors of the Federal Reserve System (U.S.).
    13. Catherine Karyotis, 2008. "Histoire de la compensation: de la monnaie aux titres," Revue d'Économie Financière, Programme National Persée, vol. 91(1), pages 77-95.
    14. Michael D. Bordo, 1990. "The lender of last resort : alternative views and historical experience," Economic Review, Federal Reserve Bank of Richmond, issue Jan, pages 18-29.
    15. Randall Kroszner, 2000. "Lessons from Financial Crises: The Role of Clearinghouses," Journal of Financial Services Research, Springer, vol. 18(2), pages 157-171, December.

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