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Banks, Free Banks, And U.S. Economic Growth

  • MATTHEW JAREMSKI
  • PETER L. ROUSSEAU

The "Federalist financial revolution" may have jump-started the U.S. economy into modern growth, but the Free Banking System (1837-1862) did not play a direct role in sustaining it. Despite lowering entry barriers and extending banking into developing regions, we find in county-level data that free banks had little or no effect on growth. The result is not just a symptom of the era, as state-chartered banks seem to have strong and positive effects on manufacturing and urbanization.

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File URL: http://hdl.handle.net/10.1111/j.1465-7295.2012.00495.x
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Article provided by Western Economic Association International in its journal Economic Inquiry.

Volume (Year): 51 (2013)
Issue (Month): 2 (04)
Pages: 1603-1621

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Handle: RePEc:bla:ecinqu:v:51:y:2013:i:2:p:1603-1621
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  2. Demetriades, Panicos O. & Hussein, Khaled A., 1996. "Does financial development cause economic growth? Time-series evidence from 16 countries," Journal of Development Economics, Elsevier, vol. 51(2), pages 387-411, December.
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  9. Rolnick, Arthur J & Weber, Warren E, 1983. "New Evidence on the Free Banking Era," American Economic Review, American Economic Association, vol. 73(5), pages 1080-91, December.
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  12. Arthur J. Rolnick & Warren E. Weber, 1986. "Inherent Instability in Banking: The Free Banking Experience," Cato Journal, Cato Journal, Cato Institute, vol. 5(3), pages 877-890, Winter.
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  16. Rolnick, Arthur J. & Weber, Warren E., 1984. "The causes of free bank failures : A detailed examination," Journal of Monetary Economics, Elsevier, vol. 14(3), pages 267-291, November.
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