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Banks, Credit Markets, and Early American Development: A Case Study of Entry and Competition

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  • WANG, TA-CHEN

Abstract

New England experienced a significant economic transformation after the Revolutionary War. Despite an extensive literature on American development, little is known about the precise role of banks in this process. This article exploits a detailed dataset from Plymouth County, Massachusetts to show that the first bank during its early stage was far more selective in lending than the pre-existing personal credit market. Thus the mere introduction of a single bank did not broaden access to credit. Following the liberalization of chartering policy in the 1820s, however, freer entry and competition drove banks to extend credit to farmers and artisans.

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  • Wang, Ta-Chen, 2008. "Banks, Credit Markets, and Early American Development: A Case Study of Entry and Competition," The Journal of Economic History, Cambridge University Press, vol. 68(2), pages 438-461, June.
    • Handle: RePEc:cup:jechis:v:68:y:2008:i:02:p:438-461_00
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    Cited by:

    1. Elizabeth Caucutt & Thomas Cooley & Nezih Guner, 2013. "The farm, the city, and the emergence of social security," Journal of Economic Growth, Springer, vol. 18(1), pages 1-32, March.
    2. Madestam, Andreas, 2014. "Informal finance: A theory of moneylenders," Journal of Development Economics, Elsevier, vol. 107(C), pages 157-174.
    3. Howard Bodenhorn, 2016. "Two Centuries of Finance and Growth in the United States, 1790-1980," Working Papers id:11352, eSocialSciences.
    4. Howard Bodenhorn, 2011. "Partnership fragility and credit costs," NBER Working Papers 16689, National Bureau of Economic Research, Inc.
    5. Ivanov, Martin & Ganev, Georgy, 2015. "Bulgarian business elite, 1900s-2000s," MPRA Paper 103427, University Library of Munich, Germany.
    6. Sofia Murhem, 2016. "Credit for the poor: the decline of pawnbroking 1880–1930," European Review of Economic History, European Historical Economics Society, vol. 20(2), pages 198-214.

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