Banker Preferences, Interbank Connections, and the Enduring Structure of the Federal Reserve System

Matthew Jaremski and David Wheelock

No 21553, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Established by a three person committee in 1914, the structure of the Federal Reserve System has remained essentially unchanged ever since, despite criticism at the time and over ensuing decades. With Congress now considering reforms to the System, this paper examines the original selection of cities for Reserve Banks and branches, and of district boundaries. We show that each aspect of the Fed’s structure reflected the preferences of national banks, including adjustments to district boundaries after 1914. Further, using newly-collected data on interbank connections, we find that banker preferences mirrored established correspondent relationships. The Federal Reserve was thus formed on top of the structure that it was meant to replace.

JEL-codes: E58 N21 N22 (search for similar items in EconPapers)
Date: 2015-09
New Economics Papers: this item is included in nep-his, nep-mac and nep-mon
Note: DAE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Published as Matthew Jaremski & David C. Wheelock, 2017. "Banker preferences, interbank connections, and the enduring structure of the Federal Reserve System," Explorations in Economic History, vol 66, pages 21-43.

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Working Paper: Banker Preferences, Interbank Connections, and the Enduring Structure of the Federal Reserve System (2015)
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