Crises and the Development of Economic Institutions: Some Microeconomic Evidence
American Economic Review
vol. 106,
no. 5, May 2016
(pp. 524-27)
Abstract
This paper studies the long run effects of financial crises using new bank and town level data from around the Great Depression. We find evidence that banking markets became much more concentrated in areas that experienced a greater initial collapse in the local banking system. There is also evidence that financial regulation after the Great Depression, and in particular limits on bank branching, may have helped to render the effects of the initial collapse persistent. All of this suggests a reason why post-crisis financial regulation, while potentially reducing financial instability, might also have longer run real consequences.Citation
Rajan, Raghuram, and Rodney Ramcharan. 2016. "Crises and the Development of Economic Institutions: Some Microeconomic Evidence." American Economic Review, 106 (5): 524-27. DOI: 10.1257/aer.p20161042Additional Materials
JEL Classification
- D02 Institutions: Design, Formation, Operations, and Impact
- E32 Business Fluctuations; Cycles
- G01 Financial Crises
- G21 Banks; Depository Institutions; Micro Finance Institutions; Mortgages
- G28 Financial Institutions and Services: Government Policy and Regulation
- N12 Economic History: Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations: U.S.; Canada: 1913-
- N22 Economic History: Financial Markets and Institutions: U.S.; Canada: 1913-