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The Evolution of Bank Supervisory Institutions: Evidence from American States

Published online by Cambridge University Press:  27 August 2015

Kris James Mitchener
Kris James Mitchener is Professor, Department of Economics, Leavey School of Business, Santa Clara University500 El Camino Real, Santa Clara, CA 95053. E-mail:
Matthew Jaremski
Matthew Jaremski is Assistant Professor, Department of Economics, Colgate University, 13 Oak Dr., Hamilton, NY 13346. E-mail:


We use a novel data set spanning 1820–1910 to assess the factors leading to the creation of formal bank supervisory institutions across American states. We show that it took more than a century for all states to create separate agencies tasked with monitoring the safety and soundness of banks. State legislatures initially pursued cheaper regulatory alternatives, such as double liability laws; however, banking distress at the state level as well as the structural shift from note-issuing to deposit-taking commercial banks and competition with national banks propelled policymakers to adopt costly and permanent supervisory institutions.

Copyright © The Economic History Association 2015 

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We thank Jessica Hardwick, Lea Halloway, and Amanda Razon for invaluable research assistance and Mark Carlson, David Wheelock, Charlie Calomiris, Paul Rhode and two anonymous referees for helpful comments and suggestions.



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