17 April 2014

The Expansion of U.S. Railroads and Informed Bank Lending

Jeremy Atack, Matthew Jaremski, and Peter Rousseau relate bank failures and the condition of bank balance sheets in the United States between 1830 and 1860 to the proximity to transportation infrastructure. They find that proximity to railroads, but not to other means of transportation, improved bank soundness. They attribute this to changes in bank asset composition that were due to information flows facilitated by railroads.