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Do Economists Reach a Conclusion on Free-Banking Episodes?

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  • Ignacio Briones
  • Hugh Rockoff

Abstract

How should banks be regulated? Must governments tightly regulate banks to prevent financial panics, or is little or no regulation best? Can private banks be trusted to issue paper money or must this activity be a government monopoly? Theory can help answer these questions, but increasingly in recent years economists have turned to the natural experiments of history to find out how well free banking systems, or more accurately lightly regulated banking systems, have worked in practice. We now have numerous studies of lightly regulated banking in Scotland, the United States, Canada, and many other countries. As usual, research has produced new questions and heated controversies. The resulting ruckus tends to obscure the areas in which research has produced a consensus. Here we try to separate the areas where there is a consensus from areas where research is still in its early stages.

Suggested Citation

  • Ignacio Briones & Hugh Rockoff, 2005. "Do Economists Reach a Conclusion on Free-Banking Episodes?," Econ Journal Watch, Econ Journal Watch, vol. 2(2), pages 279-324, August.
    • Handle: RePEc:ejw:journl:v:2:y:2005:i:2:p:279-324
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    References listed on IDEAS

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    3. Mejía Cubillos, Javier, 2012. "Propuesta metodológica para el cálculo del riesgo sistémico financiero en estudios de Historia Económica: Aplicación para el caso de la banca libre en Antioquia, 1888 [A methodology for assessing f," MPRA Paper 35460, University Library of Munich, Germany.
    4. Rania Adel Al-Bawwab, 2022. "The zecca mint: a self-enforcing monetary constitution in historic venice," Economics of Governance, Springer, vol. 23(1), pages 1-15, March.
    5. Alexander Fink, 2014. "Free banking as an evolving system: The case of Switzerland reconsidered," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 27(1), pages 57-69, March.
    6. Lawrence H. White, 2022. "The private mint in economics: evidence from the American gold rushes," Economic History Review, Economic History Society, vol. 75(1), pages 3-21, February.
    7. Lawrence H. White, 2013. "Antifragile Banking and Monetary Systems," Cato Journal, Cato Journal, Cato Institute, vol. 33(3), pages 474-484, Fall.
    8. González-Correa, Ignacio, 2020. "La Caja Nacional de Ahorros y las cajas financieras estatales en Chile, c. 1920-1950 [The Caja Nacional de Ahorros and state-owned financial banks in Chile, c. 1920-1950]," MPRA Paper 105013, University Library of Munich, Germany.
    9. Hassan, Sherif Maher, 2016. "A Historical Retrieval of the Methods and Functions of Monetary Policy," MPRA Paper 75648, University Library of Munich, Germany.
    10. Masato Shizume & Masayoshi Tsurumi, 2016. "Modernizing the financial system in Japan during the 19th century: National Banks in Japan in the Context of Free Banking," Working Papers 1607, Waseda University, Faculty of Political Science and Economics.
    11. Seán Kenny & Anders Ögren & Liang Zhao, 2023. "The highs and the lows: bank failures in Sweden through inflation and deflation, 1914–1926," European Review of Economic History, European Historical Economics Society, vol. 27(2), pages 223-249.
    12. Mejía Cubillos, Javier, 2012. "Medición del riesgo sistémico financiero en estudios de historia económica : propuesta metodológica y aplicación para la banca libre en Antioquia, 1888," Borradores Departamento de Economía 17481, Universidad de Antioquia, CIE.

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    More about this item

    Keywords

    free banking; convertibility; bank regulation; lender of last resort; banking stability; historical experiences;
    All these keywords.

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G29 - Financial Economics - - Financial Institutions and Services - - - Other
    • N20 - Economic History - - Financial Markets and Institutions - - - General, International, or Comparative

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