Friday, July 16, 2010

What I'm Reading

Peter Rousseau "The Market For Bank Stocks and the Rise of Deposit Banking in New York City, 1866-1897" NBER Working Paper 15770

Although not traded as actively on the New York Stock Exchange as they had been in the past, the over-the-counter market for these securities was efficient and the local newspapers quoted bank stock prices on a regular basis. The prices revealed in this market became reliable sources of information about the soundness of these institutions. Most important,
ordinary depositors – mostly those not actually investing in bank stocks – used this information to choose among the options for placing their savings. It is in this way that the market for bank stocks in New York contributed to increased public confidence in the banking system and the observed rise in deposits.

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