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The Evolution of Bank Supervision: Evidence from U.S. States

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  • Mitchener, Kris James

    (University of Warwick)

Abstract

We use a novel data set spanning 1820-1910 to examine the origins of bank supervision and assess factors leading to the creation of formal bank supervisory institutions across U.S. states. We show that it took more than a century for the widespread adoption of independent supervisory institutions tasked with maintaining the safety and soundness of banks. State legislatures initially pursued cheaper regulatory alternatives, such as double liability laws; however, banking distress at the state level as well as the structural shift from note-issuing to deposit-taking commercial banks propelled policymakers to adopt costly and permanent supervisory institutions.

Suggested Citation

  • Mitchener, Kris James, 2014. "The Evolution of Bank Supervision: Evidence from U.S. States," CAGE Online Working Paper Series 181, Competitive Advantage in the Global Economy (CAGE).
  • Handle: RePEc:cge:wacage:181
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    File URL: http://www2.warwick.ac.uk/fac/soc/economics/research/centres/cage/manage/publications/181-2014_mitchener.pdf
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    References listed on IDEAS

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    Cited by:

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    2. Hotori, Eiji & Wendschlag, Mikael, 2018. "The formalization of banking supervision: A comparison between Japan and Sweden," eabh Papers 18-03, The European Association for Banking and Financial History (EABH).
    3. Salter, Alexander W. & Veetil, Vipin & White, Lawrence H., 2017. "Extended shareholder liability as a means to constrain moral hazard in insured banks," The Quarterly Review of Economics and Finance, Elsevier, vol. 63(C), pages 153-160.

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    Keywords

    bank supervision; U.S. States;

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