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

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  • MATTHEW JAREMSKI
  • PETER L. ROUSSEAU

Abstract

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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Suggested Citation

  • Matthew Jaremski & Peter L. Rousseau, 2013. "Banks, Free Banks, And U.S. Economic Growth," Economic Inquiry, Western Economic Association International, vol. 51(2), pages 1603-1621, April.
  • Handle: RePEc:bla:ecinqu:v:51:y:2013:i:2:p:1603-1621
    DOI: j.1465-7295.2012.00495.x
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    References listed on IDEAS

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    1. 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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    6. Howard Bodenhorn & David Cuberes, 2010. "Financial development and city growth: Evidence from Northeastern American cities, 1790-1870," Working Papers 2010/35, Institut d'Economia de Barcelona (IEB).
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    12. Arestis, Philip & Demetriades, Panicos O, 1997. "Financial Development and Economic Growth: Assessing the Evidence," Economic Journal, Royal Economic Society, vol. 107(442), pages 783-799, May.
    13. Matthew Jaremski, 2010. "Free Bank Failures: Risky Bonds versus Undiversified Portfolios," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 42(8), pages 1565-1587, December.
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    Cited by:

    1. repec:spr:cliomt:v:12:y:2018:i:1:d:10.1007_s11698-016-0155-4 is not listed on IDEAS
    2. Ager, Philipp & Spargoli, Fabrizio, 2013. "Bank Deregulation, Competition and Economic Growth: The US Free Banking Experience," MPRA Paper 49269, University Library of Munich, Germany.
    3. repec:eee:juecon:v:104:y:2018:i:c:p:47-58 is not listed on IDEAS
    4. Peter L. Rousseau, 2013. "Politics on the road to the U.S. monetary union," Vanderbilt University Department of Economics Working Papers 13-00006, Vanderbilt University Department of Economics.
    5. repec:eee:jbfina:v:85:y:2017:i:c:p:1-14 is not listed on IDEAS
    6. repec:pal:compes:v:60:y:2018:i:1:d:10.1057_s41294-018-0056-6 is not listed on IDEAS
    7. Howard Bodenhorn, 2017. "Opening Access: Banks and Politics in New York from the Revolution to the Civil War," NBER Working Papers 23560, National Bureau of Economic Research, Inc.
    8. Jaremski, Matthew, 2014. "National Banking's Role in U.S. Industrialization, 1850–1900," The Journal of Economic History, Cambridge University Press, vol. 74(01), pages 109-140, March.
    9. Howard Bodenhorn, 2016. "Two Centuries of Finance and Growth in the United States, 1790-1980," Working Papers id:11352, eSocialSciences.
    10. Popov, Alexander, 2017. "Evidence on finance and economic growth," Working Paper Series 2115, European Central Bank.
    11. Emmanuel Carré & Guillaume L’Œillet, 2017. "Une revue de la littérature récente sur le nexus finance-croissance après la crise : apports, limites et pistes de recherche," Revue d'économie financière, Association d'économie financière, vol. 0(3), pages 271-290.

    More about this item

    JEL classification:

    • E0 - Macroeconomics and Monetary Economics - - General
    • N0 - Economic History - - General

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