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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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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Do banks facilitate economic growth? If so, what type?
      by Chris Colvin in NEP-HIS blog on 2013-02-13 23:39:33

    Citations

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    Cited by:

    1. 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.
    2. Emmanuel Carré & Guillaume L’œillet, 2018. "The Literature on the Finance–Growth Nexus in the Aftermath of the Financial Crisis: A Review," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 60(1), pages 161-180, March.
    3. Popov, Alexander, 2017. "Evidence on finance and economic growth," Working Paper Series 2115, European Central Bank.
    4. Philipp Ager & Fabrizio Spargoli, 2013. "Bank Deregulation, Competition and Economic Growth: The US Free Banking Experience," Working Papers 0050, European Historical Economics Society (EHES).
    5. 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.
    6. 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.
    7. Christopher Bailey & Tarique Hossain & Gary Pecquet, 2018. "Private banks in early Michigan, 1837–1884," Cliometrica, Springer;Cliometric Society (Association Francaise de Cliométrie), vol. 12(1), pages 153-180, January.
    8. Bodenhorn, Howard & Cuberes, David, 2018. "Finance and urbanization in early nineteenth-century New York," Journal of Urban Economics, Elsevier, vol. 104(C), pages 47-58.
    9. Spierdijk, Laura & Shaffer, Sherrill & Considine, Tim, 2017. "How do banks adjust to changing input prices? A dynamic analysis of U.S. commercial banks before and after the crisis," Journal of Banking & Finance, Elsevier, vol. 85(C), pages 1-14.
    10. Jaremski, Matthew, 2014. "National Banking's Role in U.S. Industrialization, 1850–1900," The Journal of Economic History, Cambridge University Press, vol. 74(1), pages 109-140, March.
    11. Howard Bodenhorn, 2016. "Two Centuries of Finance and Growth in the United States, 1790-1980," Working Papers id:11352, eSocialSciences.
    12. Livio Di Matteo & Angela Redish, 2015. "The evolution of financial intermediation: Evidence from 19th-century Ontario microdata," Canadian Journal of Economics, Canadian Economics Association, vol. 48(3), pages 963-987, August.
    13. James Feigenbaum & James Lee & Filippo Mezzanotti, 2022. "Capital Destruction and Economic Growth: The Effects of Sherman's March, 1850–1920," American Economic Journal: Applied Economics, American Economic Association, vol. 14(4), pages 301-342, October.

    More about this item

    JEL classification:

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

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