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Did Railroads Make Antebellum U.S. Banks More Sound?

In: Enterprising America: Businesses, Banks, and Credit Markets in Historical Perspective

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  • Jeremy Atack
  • Matthew S. Jaremski
  • Peter L. Rousseau

Abstract

We investigate the relationships of bank failures and balance sheet conditions with measures of proximity to different forms of transportation in the United States over the period from 1830-1860. A series of hazard models and bank-level regressions indicate a systematic relationship between proximity to railroads (but not to other means of transportation) and “good” banking outcomes. Although railroads improved economic conditions along their routes, we offer evidence of another channel. Specifically, railroads facilitated better information flows about banks that led to modifications in bank asset composition consistent with reductions in the incidence of moral hazard.

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This item is provided by National Bureau of Economic Research, Inc in its series NBER Chapters with number 13136.

Handle: RePEc:nbr:nberch:13136

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  1. Richard Hornbeck, 2010. "Barbed Wire: Property Rights and Agricultural Development," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 125(2), pages 767-810, May.
  2. Hornbeck, Richard A., 2010. "Barbed Wire: Property Rights and Agricultural Development," Scholarly Articles 11185832, Harvard University Department of Economics.
  3. Rolnick, Arthur J. & Weber, Warren E., 1984. "The causes of free bank failures : A detailed examination," Journal of Monetary Economics, Elsevier, Elsevier, vol. 14(3), pages 267-291, November.
  4. Robert A. Margo & Jeremy Atack, 2010. "The Impact of Access to Rail Transportation on Agricultural Improvement: The American Midwest as a Test Case, 1850-1860," Boston University - Department of Economics - Working Papers Series, Boston University - Department of Economics WP2010-026, Boston University - Department of Economics.
  5. Economopoulos, Andrew J, 1988. "Illinois Free Banking Experience," Journal of Money, Credit and Banking, Blackwell Publishing, Blackwell Publishing, vol. 20(2), pages 249-64, May.
  6. Jeremy Atack & Fred Bateman & Michael Haines & Robert A. Margo, 2009. "Did Railroads Induce Or Follow Economic Growth? Urbanization And Population Growth In The American Midwest, 1850-60," Boston University - Department of Economics - The Institute for Economic Development Working Papers Series, Boston University - Department of Economics dp-178, Boston University - Department of Economics.
  7. Howard Bodenhorn, 1998. "Quis Custodiet Ipsos Custodes?," Eastern Economic Journal, Eastern Economic Association, vol. 24(1), pages 7-24, Winter.
  8. Rousseau, Peter L & Wachtel, Paul, 1998. "Financial Intermediation and Economic Performance: Historical Evidence from Five Industrialized Countries," Journal of Money, Credit and Banking, Blackwell Publishing, Blackwell Publishing, vol. 30(4), pages 657-78, November.
  9. Rockoff, Hugh, 1974. "The Free Banking Era: A Reexamination," Journal of Money, Credit and Banking, Blackwell Publishing, Blackwell Publishing, vol. 6(2), pages 141-67, May.
  10. Jeremy Atack & Michael R. Haines & Robert A. Margo, 2008. "Railroads and the Rise of the Factory: Evidence for the United States, 1850-70," NBER Working Papers 14410, National Bureau of Economic Research, Inc.
  11. Atack, Jeremy, 2013. "On the Use of Geographic Information Systems in Economic History: The American Transportation Revolution Revisited," The Journal of Economic History, Cambridge University Press, Cambridge University Press, vol. 73(02), pages 313-338, June.
  12. Matthew Jaremski, 2010. "Free Bank Failures: Risky Bonds versus Undiversified Portfolios," Journal of Money, Credit and Banking, Blackwell Publishing, Blackwell Publishing, vol. 42(8), pages 1565-1587, December.
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  1. Technology and Financial Inclusion in North America
    by bbatiz in NEP-HIS blog on 2014-07-29 13:53:34

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