IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this article

Reputation Formation in Early Bank Note Markets

Listed author(s):
  • Gorton, Gary

Two hypotheses concerning firms issuing debt for the first time are tested. The first is that new firms' debt is discounted more heavily by lenders compared to otherwise identical firms that have 'reputations' in the form of credit histories. The second hypothesis is that, prior to the establishment of a reputation, new firms issuing debt are monitored more intensely. The sample studied consists of new banks issuing bank notes for the first time during the American Free Banking Era (1838-60). The results explain why the pre-Civil War system of private money issuance by banks was not plagued by problems of overissuance ('wildcat banking'). Copyright 1996 by University of Chicago Press.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://dx.doi.org/10.1086/262027
File Function: full text
Download Restriction: Access to full text is restricted to JSTOR subscribers. See http://www.jstor.org for details.

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Article provided by University of Chicago Press in its journal Journal of Political Economy.

Volume (Year): 104 (1996)
Issue (Month): 2 (April)
Pages: 346-397

as
in new window

Handle: RePEc:ucp:jpolec:v:104:y:1996:i:2:p:346-97
Contact details of provider: Web page: http://www.journals.uchicago.edu/JPE/

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Sorensen, Eric H., 1982. "On the Seasoning Process of New Bonds: Some Are More Seasoned than Others," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 17(02), pages 195-208, June.
  2. Du Boff, Richard B., 1980. "Business Demand and the Development of the Telegraph in the United States, 1844–1860," Business History Review, Cambridge University Press, vol. 54(04), pages 459-479, December.
  3. Ederington, Louis H, 1974. "The Yield Spread of New Issues of Corporate Bonds," Journal of Finance, American Finance Association, vol. 29(5), pages 1531-1543, December.
  4. Lucas, Robert E, Jr, 1980. "Equilibrium in a Pure Currency Economy," Economic Inquiry, Western Economic Association International, vol. 18(2), pages 203-220, April.
  5. Boyle, Phelim P. & Ananthanarayanan, A. L., 1977. "The impact of variance estimation in option valuation models," Journal of Financial Economics, Elsevier, vol. 5(3), pages 375-387, December.
  6. Wasserfallen, Walter & Wydler, Daniel, 1988. " Underpricing of Newly Issued Bonds: Evidence from the Swiss Capital Market," Journal of Finance, American Finance Association, vol. 43(5), pages 1177-1191, December.
  7. Merton, Robert C, 1974. "On the Pricing of Corporate Debt: The Risk Structure of Interest Rates," Journal of Finance, American Finance Association, vol. 29(2), pages 449-470, May.
  8. Weinstein, Mark I, 1978. "The Seasoning Process of New Corporate Bond Issues," Journal of Finance, American Finance Association, vol. 33(5), pages 1343-1354, December.
  9. Arthur J. Rolnick & Warren E. Weber, 1982. "Free banking, wildcat banking, and shinplasters," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Fall, pages -.
  10. Kahn, James A, 1985. "Another Look at Free Banking in the United States [New Evidence on the Free Banking Era]," American Economic Review, American Economic Association, vol. 75(4), pages 881-885, September.
  11. Black, Fischer & Scholes, Myron S, 1973. "The Pricing of Options and Corporate Liabilities," Journal of Political Economy, University of Chicago Press, vol. 81(3), pages 637-654, May-June.
  12. Lindvall, John R, 1977. "New Issue Corporate Bonds, Seasoned Market Efficiency and Yield Spreads," Journal of Finance, American Finance Association, vol. 32(4), pages 1057-1067, September.
  13. Mark Rubinstein, 1976. "The Valuation of Uncertain Income Streams and the Pricing of Options," Bell Journal of Economics, The RAND Corporation, vol. 7(2), pages 407-425, Autumn.
  14. Fung, W K H & Rudd, Andrew, 1986. " Pricing New Corporate Bond Issues: An Analysis of Issue Cost and Seasoning Effects," Journal of Finance, American Finance Association, vol. 41(3), pages 633-643, July.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:ucp:jpolec:v:104:y:1996:i:2:p:346-97. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Journals Division)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.