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Antebellum banking regulation: a comparative approach

Gandhi, Alka
http://rave.ohiolink.edu/etdc/view?acc_num=osu1054733779

Abstract Details

2003, Doctor of Philosophy, Ohio State University, Economics.
Extensive historical and contemporary studies establish important links between financial systems and economic development. Despite the importance of this research area and the extent of prior efforts, numerous interesting questions remain about the consequences of alternative regulatory regimes for the health of the financial sector. As a dynamic period of economic and financial evolution, which was accompanied by diverse banking regulations across states, the antebellum era provides a valuable laboratory for study. This dissertation utilizes a rich data set of balance sheets from antebellum banks in four U.S. states, Massachusetts, Ohio, Louisiana and Tennessee, to examine the relative impacts of preventative banking regulation on bank performance. Conceptual models of financial regulation are used to identify the motivations behind each state’s regulation and how it changed over time. Next, a duration model is employed to model the odds of bank failure and to determine the impact that regulation had on the ability of a bank to remain in operation. Finally, the estimates from the duration model are used to perform a counterfactual that assesses the impact on the odds of bank failure when imposing one state’s regulation on another state, ceteris paribus. The results indicate that states did enact regulation that was superior to alternate contemporaneous banking regulation, with respect to the ability to maintain the banking system. This is especially evident in Tennessee where the counterfactual indicates that the odds of bank failure would have increased from 6.3% to 67.3% under Ohio regulation. The results are even more striking when the counterfactual is performed by subintervals of the antebellum period. During the turbulent subperiod of 1856-1860, the estimated odds of a Tennessee bank failing are 13%. However, this would have increased to 83.6% had Tennessee been under Ohio law. Although some results indicate that alternative laws would have lowered the odds of failure, the greatest decreases in the odds occur during subperiods when the states’ banking systems were the most unstable. However, inappropriate regulation may have caused the instability. Whichever the case, this research suggests that there is not a universally optimal solution to banking regulation.
Richard Steckel (Advisor)
BANKING; subperiod; Tennessee; Louisiana; bank closings; ANTEBELLUM

Recommended Citations

Citations

  • Gandhi, A. (2003). Antebellum banking regulation: a comparative approach [Doctoral dissertation, Ohio State University]. OhioLINK Electronic Theses and Dissertations Center. http://rave.ohiolink.edu/etdc/view?acc_num=osu1054733779

    APA Style (7th edition)

  • Gandhi, Alka. Antebellum banking regulation: a comparative approach. 2003. Ohio State University, Doctoral dissertation. OhioLINK Electronic Theses and Dissertations Center, http://rave.ohiolink.edu/etdc/view?acc_num=osu1054733779.

    MLA Style (8th edition)

  • Gandhi, Alka. "Antebellum banking regulation: a comparative approach." Doctoral dissertation, Ohio State University, 2003. http://rave.ohiolink.edu/etdc/view?acc_num=osu1054733779

    Chicago Manual of Style (17th edition)

osu1054733779
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© 2003, all rights reserved.
This open access ETD is published by The Ohio State University and OhioLINK.