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Banks, Credit Markets, and Early American Development: A Case Study of Entry and Competition

Published online by Cambridge University Press:  01 June 2008

TA-CHEN WANG
TA-CHEN WANG*
Affiliation:
Assistant Professor, Department of Economics, California State University, Sacramento, 6000 J Street, Sacramento, CA 95819-6082. E-mail: [email protected]
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Abstract

New England experienced a significant economic transformation after the Revolutionary War. Despite an extensive literature on American development, little is known about the precise role of banks in this process. This article exploits a detailed dataset from Plymouth County, Massachusetts to show that the first bank during its early stage was far more selective in lending than the pre-existing personal credit market. Thus the mere introduction of a single bank did not broaden access to credit. Following the liberalization of chartering policy in the 1820s, however, freer entry and competition drove banks to extend credit to farmers and artisans.

Type
ARTICLES
Information
The Journal of Economic History , Volume 68 , Issue 2 , June 2008 , pp. 438 - 461
Copyright
Copyright © The Economic History Association 2008

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