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The Market for Bank Stocks and the Rise of Deposit Banking in New York City, 1866–1897

Published online by Cambridge University Press:  14 November 2011

PETER L. ROUSSEAU
PETER L. ROUSSEAU*
Affiliation:
Professor, Department of Economics, Vanderbilt University, Box 1819 Station B, Nashville, TN 37235; and Research Associate, National Bureau of Economic Research. E-mail: [email protected].
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Abstract

The rapid growth of deposits in New York over the late nineteenth century is often attributed to the release of pent-up demand for transactions services. I advance a complementary explanation that emphasizes the market for bank shares. The stock market was important because it generated quotations that signaled depositors about the condition of individual banks as innovations in banking practices allowed confidence to grow. A new database of prices, dividends, and balance sheet items for traded banks and a series of dynamic panel models show that fluctuations in bank prices influenced the course of the expansion.

Type
ARTICLES
Information
The Journal of Economic History , Volume 71 , Issue 4 , December 2011 , pp. 976 - 1005
Copyright
Copyright © The Economic History Association 2011

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