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Financial development and city growth: Evidence from Northeastern American cities, 1790-1870

  • Howard Bodenhorn

    ()

    (Clemson University)

  • David Cuberes

    ()

    (University of Alicante)

We find a positive and strong correlation between financial development and subsequent city growth in the Northeastern United States between 1790 and 1870. The correlation is robust to controls for geographical characteristics of the city, the percentage of population working in different sectors, and its initial population. Our estimates suggest that the presence of a bank at a given location increases its subsequent growth by one to two percentage points per year. Because urban growth was correlated with economic development in the nineteenth-century US, we believe our results provide further support for the finance-growth nexus.

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File URL: http://ieb.ub.edu/aplicacio/fitxers/2010/9/Doc2010-35.pdf
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Paper provided by Institut d'Economia de Barcelona (IEB) in its series Working Papers with number 2010/35.

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Length: 42 pages
Date of creation: 2010
Date of revision:
Handle: RePEc:ieb:wpaper:2010/9/doc2010-35
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