54 Pages Posted: 23 Sep 2008 Last revised: 15 Sep 2010
Date Written: September 2008
Landed elites in the United States in the early decades of the twentieth century played a significant role in restricting the development of finance. States that had higher land concentration passed more restrictive banking legislation. At the county level, counties with very concentrated land holdings tended to have disproportionately fewer banks per capita. Banks were especially scarce both when landed elites' incentive to suppress finance, as well as their ability to exercise local influence, was higher. Finally, the resulting financial underdevelopment was negatively correlated with subsequent manufacturing growth. We draw lessons from this episode for understanding economic development.
Suggested Citation: Suggested Citation
Rajan, Raghuram G. and Ramcharan, Rodney, Landed Interests and Financial Underdevelopment in the United States (September 2008). NBER Working Paper No. w14347. Available at SSRN: https://ssrn.com/abstract=1271379