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

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.

Type
Articles
Information
The Journal of Economic History , Volume 75 , Issue 3 , September 2015 , pp. 819 - 859
Copyright
Copyright © The Economic History Association 2015 

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Footnotes

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.

References

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