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Land and Credit: A Study of the Political Economy of Banking in the United States in the Early 20th Century
Author(s) -
RAJAN RAGHURAM G.,
RAMCHARAN RODNEY
Publication year - 2011
Publication title -
the journal of finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 18.151
H-Index - 299
eISSN - 1540-6261
pISSN - 0022-1082
DOI - 10.1111/j.1540-6261.2011.01694.x
Subject(s) - elite , politics , state (computer science) , order (exchange) , per capita , economics , agriculture , political science , finance , geography , population , law , sociology , demography , archaeology , algorithm , computer science
We find that, in the early 20th century, counties in the United States where the agricultural elite had disproportionately large land holdings had significantly fewer banks per capita, even correcting for state‐level effects. Moreover, credit appears to have been costlier, and access to it more limited, in these counties. The evidence suggests that elites may restrict financial development in order to limit access to finance, and they may be able to do so even in countries with well‐developed political institutions.