How important are banks for development? National banks in the United States 1870–1900

Scott Fulford

No 753, Boston College Working Papers in Economics from Boston College Department of Economics

Abstract: What financial services matter for growth? This paper examines the effects national banks had on growth in the United States from 1870-1900. These banks were commercial not investment banks: they made short term loans and could not take land as collateral. I use the discontinuity in entry caused by a large minimum capital requirement to identify the effects of banking. Counties getting a bank increased production per person substantially and tilted production towards agriculture over manufacturing by expanding land under cultivation, not improving yields. The effects are highly persistent and show that the commercial activities of banks matter for growth.

Keywords: National banks; commercial banking; development; growth (search for similar items in EconPapers)
JEL-codes: D91 O16 (search for similar items in EconPapers)
Date: 2010-09-01, Revised 2014-12-15
New Economics Papers: this item is included in nep-his
Note: Previously circulated as "If financial development matters, then how? National banks in the United States 1870-1900"
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Citations: View citations in EconPapers (4)

Forthcoming, Review of Economics and Statistics

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Journal Article: How Important Are Banks for Development? National Banks in the United States, 1870-1900 (2015)
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