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Racial violence, political representation, and the threat to banks as open access institutions

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  • Traweek, Virginia
  • Wardlaw, Malcolm

Abstract

Using detailed depositor arrival data from the Freedman’s Savings and Trust, we examine how the failure to prevent racial violence impacts bank participation. From 1866 to 1873, we find that events of racial violence perpetrated against Black Americans decrease new account openings at branches in the same region by 25% relative to other branches in the 30 days after the event. Alternatively, events that increased political representation and protections increase the relative arrival of new depositors at the bank by around 50% for the affected branches. We also show that those who opened accounts in the wake of a violent event were less likely to close an account before the bank’s eventual failure, suggesting that those who were resistant to the impact of political violence may have tragically been more exposed to other institutional failures.

Suggested Citation

  • Traweek, Virginia & Wardlaw, Malcolm, 2025. "Racial violence, political representation, and the threat to banks as open access institutions," Journal of Banking & Finance, Elsevier, vol. 172(C).
  • Handle: RePEc:eee:jbfina:v:172:y:2025:i:c:s0378426625000032
    DOI: 10.1016/j.jbankfin.2025.107382
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    More about this item

    Keywords

    Violence; Banking participation; Minority banking; Historical finance;
    All these keywords.

    JEL classification:

    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • G53 - Financial Economics - - Household Finance - - - Financial Literacy
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets
    • N11 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - U.S.; Canada: Pre-1913
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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