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Two Centuries of Finance and Growth in the United States, 1790-1980

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  • Howard Bodenhorn

Abstract

Do efficient financial markets and institutions promote economic growth? Have they done so in the past? This essay, to be included in the Handbook of Finance and Development (edited by Thorsten Beck and Ross Levine), surveys a large and diverse historical literature that explores the connection between finance and growth in US history. The US financial system was important in mobilizing savings, allocating capital, exerting corporate control, and mitigating borrower opportunism. US finance was characterized by a wide variety of intermediaries – commercial banks, savings banks, building and loan associations, mortgage companies, investment banks and securities markets – that emerged to fill specific financial niches, compete with and complement the activities of existing intermediaries. The weight of the evidence is consistent with the interpretation that finance facilitated and encouraged growth. Despite the breadth and diversity of approaches, there remain many potentially fruitful lines of further inquiry. [Working Paper 22652]

Suggested Citation

  • Howard Bodenhorn, 2016. "Two Centuries of Finance and Growth in the United States, 1790-1980," Working Papers id:11352, eSocialSciences.
    • Handle: RePEc:ess:wpaper:id:11352
    Note: Institutional Papers
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    Cited by:

    1. Giorgio Fagiolo & Daniele Giachini & Andrea Roventini, 2020. "Innovation, finance, and economic growth: an agent-based approach," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 15(3), pages 703-736, July.
    2. Howard Bodenhorn, 2017. "Finance and Growth: Household Savings, Public Investment, and Public Health in Late Nineteenth-Century New Jersey," NBER Working Papers 23430, National Bureau of Economic Research, Inc.
    3. 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.
    4. Giorgio Fagiolo & Daniele Giachini & Andrea Roventini, 2017. "Innovation, Finance, and Economic Growth : an agent-based model," Working Papers hal-03455400, HAL.
    5. 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.
    6. Damm, Jason & McNulty, James E., 2022. "Attorney discipline, the quality of legal systems and economic growth within the United States," The Quarterly Review of Economics and Finance, Elsevier, vol. 84(C), pages 516-533.
    7. repec:spo:wpmain:info:hdl:2441/1fai9i49vu8kfangr7lal7cks5 is not listed on IDEAS

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    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • N2 - Economic History - - Financial Markets and Institutions

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