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Intermediary Asset Pricing during the National Banking Era

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  • Colin Weiss

Abstract

Financial intermediary balance sheets matter for asset returns even when these intermediaries do not directly participate in the relevant asset markets. During the National Banking Era, liquidity conditions for the New York Clearinghouse (NYCH) banks forecast excess returns for stocks, bonds, and currencies. The NYCH banks had little to no direct participation in these markets; their main link to these markets was through securities financing. Liquidity conditions affect asset prices through the credit growth of the NYCH banks, which shapes marginal investors' discount rates. I use institutional features of this era to provide evidence in favor of this mechanism.

Suggested Citation

  • Colin Weiss, 2020. "Intermediary Asset Pricing during the National Banking Era," International Finance Discussion Papers 1302, Board of Governors of the Federal Reserve System (U.S.).
    • Handle: RePEc:fip:fedgif:1302
    DOI: 10.17016/IFDP.2020.1302
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    References listed on IDEAS

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    More about this item

    Keywords

    Liquidity management; Margin loans; Intermediary asset pricing; National banks;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • N21 - Economic History - - Financial Markets and Institutions - - - U.S.; Canada: Pre-1913

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