Capital accumulation is central to economic development and economists have had a long fascination with its history. An increase in the savings rate was the fundamental aspect of Walt Whitman Rostow's vision of the stages of economic development, and Robert Solow's path-breaking work showed how standards of living are tied to the level of capital per worker in an economy. In these formulations, the amount of savings directly affects the amount of capital accumulation and ultimately economic development. Lance Davis's seminal work added an important perspective on the process of capital accumulation: improvements in the allocation of scarce savings can raise standards of living (independent of the savings rate) because capital will then be allocated more productively.

Davis focused on the late nineteenth-century US, where he found that regional differences in interest rates charged by national banks were large after the Civil War, but diminished over the subsequent fifty years. He argued that firms selling commercial paper entered the financial market, made them more competitive, and the subsequent operation of the law of one price caused regional interest rates to converge. Later research by Richard Sylla and John James has confirmed Davis's findings but these authors argued that the banking industry itself became more competitive. Whatever the nature of added capital market competition, regional integration helped to improve the allocation of capital and thus aided US development.