Committee Structure and the Success of Connected Lending in Nineteenth Century New England Banks

Christopher Meissner

No 9792, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Early nineteenth century New England banking exhibited high levels of lending to directors and their associates (i.e., connected lending). Today many think this arrangement can lead to inefficiency and financial fragility. This paper explores the decision making processes inside these banks and argues that connected lending was viable when many people were involved in loan decisions. The committees used to vote on the approval of loans are the focus. Banks that required more votes for a given committee size prevented the approval of loans with private gains and social costs. The historical data are consistent with the idea that higher levels of consensus in the loan committees raised the return on assets.

JEL-codes: D71 D72 (search for similar items in EconPapers)
Date: 2003-06
Note: DAE ME
References: Add references at CitEc
Citations:

Published as Meissner, Christopher M. "Voting Rules And The Success Of Connected Lending In 19th Century New England Banks," Explorations in Economic History, 2005, v42(4,Oct), 509-528.

Downloads: (external link)
http://www.nber.org/papers/w9792.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:9792

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w9792

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().