How important are banks for development? National banks in the United States 1870–1900
What financial services matter for growth? This paper examines the effects national banks had on growth in the United States from 1870-1900. These banks were commercial not investment banks: they made short term loans and could not take land as collateral. I use the discontinuity in entry caused by a large minimum capital requirement to identify the effects of banking. Counties getting a bank increased production per person substantially and tilted production towards agriculture over manufacturing by expanding land under cultivation, not improving yields. The effects are highly persistent and show that the commercial activities of banks matter for growth.
|Date of creation:||01 Sep 2010|
|Date of revision:||15 Dec 2014|
|Publication status:||forthcoming, Review of Economics and Statistics|
|Note:||Previously circulated as "If financial development matters, then how? National banks in the United States 1870-1900"|
|Contact details of provider:|| Postal: Boston College, 140 Commonwealth Avenue, Chestnut Hill MA 02467 USA|
Web page: http://fmwww.bc.edu/EC/
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