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Effects of Federal Reserve services on the efficiency of the system for collecting checks in the United States: 1915--30

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  • R. Alton Gilbert

Abstract

This paper investigates whether the services of the Federal Reserve System improved the efficiency of the system in the United States for collecting checks relative to the efficiency of the system used by banks just prior to the formation of the Federal Reserve. There are two types of evidence that the Fed's services improved efficiency. First, the Reserve Banks quickly became major processors of interregional checks, even though banks could have continued to use the prior payments arrangements. Second, declines in the ratios of cash to total assets of banks can be attributed to the development of the Fed's check collection services.

Suggested Citation

  • R. Alton Gilbert, 1999. "Effects of Federal Reserve services on the efficiency of the system for collecting checks in the United States: 1915--30," Working Papers 1999-014, Federal Reserve Bank of St. Louis.
    • Handle: RePEc:fip:fedlwp:1999-014
    DOI: 10.20955/wp.1999.014
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    References listed on IDEAS

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    1. R. Alton Gilbert, 1998. "Did the Fed's founding improve the efficiency of the U.S. payments system?," Review, Federal Reserve Bank of St. Louis, issue May, pages 121-142.
    2. Miron, Jeffrey A, 1986. "Financial Panics, the Seasonality of the Nominal Interest Rate, and theFounding of the Fed," American Economic Review, American Economic Association, vol. 76(1), pages 125-140, March.
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    4. George B. Vest, 1940. "The par collection system of the Federal Reserve Banks," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), issue Feb, pages 89-96.
    5. Robert T. Clair & Joanna Kolson & Kenneth J. Robinson, 1995. "The Texas banking crisis and the payments system," Economic and Financial Policy Review, Federal Reserve Bank of Dallas, issue Q I, pages 13-21.
    6. John A. Weinberg, 1997. "The organization of private payment networks," Economic Quarterly, Federal Reserve Bank of Richmond, issue Spr, pages 25-44.
    7. Jeffrey M. Lacker & Jeffrey D. Walker & John A. Weinberg, 1999. "The Fed's entry into check clearing reconsidered," Economic Quarterly, Federal Reserve Bank of Richmond, issue Spr, pages 1-32.
    8. Mankiw, N Gregory & Miron, Jeffrey A & Weil, David N, 1987. "The Adjustment of Expectations to a Change in Regime: A Study of the Founding of the Federal Reserve," American Economic Review, American Economic Association, vol. 77(3), pages 358-374, June.
    9. Michael L. Katz & Carl Shapiro, 1994. "Systems Competition and Network Effects," Journal of Economic Perspectives, American Economic Association, vol. 8(2), pages 93-115, Spring.
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    11. Mankiw, N Gregory & Miron, Jeffrey A & Weil, David N, 1990. "The Adjustment of Expectations to a Change in Regime: Reply," American Economic Review, American Economic Association, vol. 80(4), pages 977-979, September.
    12. Phillips, Ronnie J. & Cutler, Harvey, 1998. "Domestic Exchange Rates and Regional Economic Growth in the United States, 1899–1908: Evidence from Cointegration Analysis," The Journal of Economic History, Cambridge University Press, vol. 58(4), pages 1010-1026, December.
    13. Edward J. Stevens, 1996. "The founders' intentions: sources of the payments services franchise of the Federal Reserve banks," Financial Services working paper 96-03, Federal Reserve Bank of Cleveland.
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    Cited by:

    1. Khiaonarong, Tanai, 2003. "Payment systems efficiency, policy approaches, and the role of the central bank," Bank of Finland Research Discussion Papers 1/2003, Bank of Finland.
    2. repec:zbw:bofrdp:2003_001 is not listed on IDEAS
    3. Tanai Khiaonarong, 2004. "Payment systems efficiency, policy approaches, and the role of the central bank," Finance 0405004, University Library of Munich, Germany.
    4. Khiaonarong, Tanai, 2003. "Payment systems efficiency, policy approaches, and the role of the central bank," Research Discussion Papers 1/2003, Bank of Finland.

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