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

Virginia Traweek and Malcolm Wardlaw

Journal of Banking & Finance, 2025, vol. 172, issue C

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.

Keywords: Violence; Banking participation; Minority banking; Historical finance (search for similar items in EconPapers)
JEL-codes: G41 G51 G53 N11 O16 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:172:y:2025:i:c:s0378426625000032

DOI: 10.1016/j.jbankfin.2025.107382

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