Working Paper: NBER ID: w18021
Authors: Matthew Jaremski; Peter L. Rousseau
Abstract: The "Federalist financial revolution" may have jump-started the U.S. economy into modern growth, but the Free Banking System (1837-1862) did not play a direct role in sustaining it. Despite lowering entry barriers and extending banking into developing regions, we find in county-level data that free banks had little or no effect on growth. The result is not just a symptom of the era, as state-chartered banks seem to have strong and positive effects on manufacturing and urbanization.
Keywords: Free Banking; Economic Growth; U.S. History; Banking Systems
JEL Codes: G21; N21; O43
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| free banking (E58) | U.S. economic growth (O51) |
| increase in the number of free banks (E59) | manufacturing capital growth (D25) |
| increase in the number of charter banks (G28) | manufacturing capital growth (D25) |
| free banking (E58) | establishment of banking services in underserved areas (G21) |
| establishment of banking services in underserved areas (G21) | future economic growth (O49) |