TY  - JOUR
AU  - Bodenhorn,Howard
TI  - Free Banking and Bank Entry in Nineteenth-Century New York
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 10654
PY  - 2004
Y2  - July 2004
UR  - http://www.nber.org/papers/w10654
L1  - http://www.nber.org/papers/w10654.pdf
N1  - Author contact info:
Howard Bodenhorn
John E. Walker Department of Economics
College of Business and Behavioral Science
201-B Sirrine Hall
Clemson University
Clemson, SC 29634
Tel: 864/656-4335
E-Mail: bodenhorn@gmail.com
AB  - Previous studies of entry under New York's free banking law of 1838 have generated conflicting results. This article shows that different measures of entry lead to different conclusions about the competitive effects of the law. Measured by the entry of new banks, New York’s free banking law led to increased rates of entry relative to other states. Free banking did not, however, lead to significant increases in capital accumulation in the industry. This paradoxical outcome resulted from the regulatory features of free banking, especially the bond security feature, which reduced profitability and incentives to invest in banking.
ER  -