Margin practices and requirements during the National Banking Era: An early example of macro‐prudential regulation
Bernard McSherry and
Berry K. Wilson
Review of Financial Economics, 2020, vol. 38, issue S1, 210-225
Abstract:
The New York stock market was plagued by a series of financial crises during the National Banking Era, culminating in the Panic of 1907. The traditional view holds that the crises were rooted in structural flaws related to trade settlement as well as excessive and indiscriminate margin lending that remained unaddressed until the formation of the Federal Reserve Bank. An examination of the historical record, however, shows that brokers sought to control contagion and spillover effects through reform of the settlement process and by modulating margin lending rates and maintenance requirements according to macroeconomic conditions, counterparty credit‐worthiness and market volatility. Using newly gathered archival data, we show that the New York Stock Exchange enacted macro‐prudential regulations that may have reduced the severity of crises during this period. By providing early evidence of private sector responses to rising systemic risk, the paper addresses an important aspect of early market microstructure.
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations:
Downloads: (external link)
https://doi.org/10.1002/rfe.1079
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:wly:revfec:v:38:y:2020:i:s1:p:210-225
Access Statistics for this article
More articles in Review of Financial Economics from John Wiley & Sons
Bibliographic data for series maintained by Wiley Content Delivery ().