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The Evolution of Bank Supervisory Institutions: Evidence from American States

Author

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  • Mitchener, Kris James
  • Jaremski, Matthew

Abstract

We use a novel data set spanning 1820–1910 to assess the factors leading to the creation of formal bank supervisory institutions across American states. We show that it took more than a century for all states to create separate agencies tasked with monitoring 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 and competition with national banks propelled policymakers to adopt costly and permanent supervisory institutions.

Suggested Citation

  • Mitchener, Kris James & Jaremski, Matthew, 2015. "The Evolution of Bank Supervisory Institutions: Evidence from American States," The Journal of Economic History, Cambridge University Press, vol. 75(3), pages 819-859, September.
    • Handle: RePEc:cup:jechis:v:75:y:2015:i:03:p:819-859_00
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    Citations

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    Cited by:

    1. Mark Carlson & Matthew Jaremski, 2023. "Liquidity Requirements, Free‐Riding, and the Implications for Financial Stability Evidence from the Early 1900s," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 55(1), pages 323-341, February.
    2. Sebastian Fleitas & Matthew Jaremski & Steven Sprick Schuster, 2023. "The U.S. Postal Savings System and the collapse of building and loan associations during the Great Depression," Southern Economic Journal, John Wiley & Sons, vol. 89(4), pages 1196-1215, April.
    3. Hilt, Eric & Jaremski, Matthew & Rahn, Wendy, 2022. "When Uncle Sam introduced Main Street to Wall Street: Liberty Bonds and the transformation of American finance," Journal of Financial Economics, Elsevier, vol. 145(1), pages 194-216.
    4. Karakoyun, Oğuz Kaan & Karakaplan, Mustafa U. & Neyaptı, Bilin, 2024. "Endogenous bank regulation and supervision: Long term implications," Journal of Financial Stability, Elsevier, vol. 70(C).
    5. Charles W. Calomiris & Matthew Jaremski & David C. Wheelock, 2019. "Interbank Connections, Contagion and Bank Distress in the Great Depression," Working Papers 2019-001, Federal Reserve Bank of St. Louis.
    6. Matthew Jaremski & David C. Wheelock, 2020. "Banking on the Boom, Tripped by the Bust: Banks and the World War I Agricultural Price Shock," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 52(7), pages 1719-1754, October.
    7. Monnet, Eric & Velde, François R., 2020. "Money, Banking, and Old-School Historical Economics," CEPR Discussion Papers 15348, C.E.P.R. Discussion Papers.
    8. Marco Molteni & Dario Pellegrino, 2021. "Lessons from the Early Establishment of Banking Supervision in Italy (1926-1936)," Quaderni di storia economica (Economic History Working Papers) 48, Bank of Italy, Economic Research and International Relations Area.
    9. Jenter, Dirk & Aldunate, Felipe & Korteweg, Arthur & Koudijs, Peter, 2021. "Shareholder Liability and Bank Failure," CEPR Discussion Papers 16309, C.E.P.R. Discussion Papers.
    10. Barry Eichengreen & Michael R. Haines & Matthew S. Jaremski & David Leblang, 2017. "Populists at the Polls: Economic Factors in the 1896 Presidential Election," NBER Working Papers 23932, National Bureau of Economic Research, Inc.
    11. Peter Koudijs & Laura Salisbury & Gurpal Sran, 2021. "For Richer, for Poorer: Bankers' Liability and Bank Risk in New England, 1867 to 1880," Journal of Finance, American Finance Association, vol. 76(3), pages 1541-1599, June.
    12. João Granja, 2018. "Disclosure Regulation in the Commercial Banking Industry: Lessons from the National Banking Era," Journal of Accounting Research, Wiley Blackwell, vol. 56(1), pages 173-216, March.
    13. Angel, Marco Del & Richardson, Gary, 2024. "Independent regulators and financial stability evidence from gubernatorial election campaigns in the Progressive Era," Journal of Financial Economics, Elsevier, vol. 152(C).
    14. Jaremski, Matthew & Mathy, Gabrial, 2017. "Looking Back On the Age of Checking in America, 1800-1960," MPRA Paper 78083, University Library of Munich, Germany.

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