Comments on Calomiris
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Description
Charles W. Calomiris’ paper, “Regulation, Industrial Structure, and Instability in U.S. Banking: An Historical Perspective,” represents a valuable contribution to the history of American financial institutions. Calomiris focuses specifically on the structural features that have affected the growth and development of the American banking industry over the years. And, although he does not answer all the questions, he at least has made substantial progress. No account of U.S. banking history will be able to ignore Clomiris’ impressive contributions. Although Calomiris focuses on a number of different topics in this paper, his major interest is on the history of branch banking. Drawing on extensive empirical research, Calomiris convincingly argues that banks organized in branch-banking structures have historically tended to be more stable and to experience fewer disruption from runs and panics than unit banks. This is in itself an important finding, both for the light it sheds on the history of the U.S. banking industry and for its implications as regards the present crisis in American banking. Although Calomiris does not emphasize the point, it is possible to extend the trajectory of his findings to reach the inference that the recent problems in U.S. banking may have stemmed, in part, from a banking system that was extremely poorly structure, with more than 10,000 banks – approximately 20,000 in the early 1920s – and many thousands of thrift institutions. The banking crisis of the 1980s, like the banking crisis of the 1930s, can plausibly be characterized as fundamentally a structural crisis: The rash of failures between 1986 and 1991, like the rash of failures between 1929 and 1933, may well have represented a form of consolidation in an industry that was notoriously inefficiently structured. It is probably not a coincidence that our sister nations, such as Canada, Japan, and Germany, all of which have a markedly more centralized banking structure, have not experienced anything like our banking catastrophe of the past few years.
Source Publication
Structural Change in Banking
Source Editors/Authors
Michael Klausner, Lawrence J. White
Publication Date
1993
Recommended Citation
Miller, Geoffrey P., "Comments on Calomiris" (1993). Faculty Chapters. 2042.
https://gretchen.law.nyu.edu/fac-chapt/2042
