The Endogenous Stability of Free Banking: Crisis as an Exogenous Phenomenon

New Perspectives on Political Economy, Vol. 6, No. 1, pp. 31-48, 2010

29 Pages Posted: 27 Jan 2011 Last revised: 15 Mar 2014

See all articles by Nicolas Cachanosky

Nicolas Cachanosky

The University of Texas at El Paso; American Institute for Economic Research; UCEMA Friedman-Hayek Center for the Study of a Free Society

Date Written: January 24, 2009

Abstract

This article studies the main aspects of free banking to put forward the argument that such a system is endogenously stable and that financial crisis is an exogenous phenomenon. In support of this conclusion, it analyzes the cases of bank runs, concerted expansion and how free banking would affect business cycles according to different schools of thought. The article concludes that money can efficiently be a market phenomenon outside the state.

Keywords: free banking, bank runs, concerted expansion

JEL Classification: E02, E59

Suggested Citation

Cachanosky, Nicolas, The Endogenous Stability of Free Banking: Crisis as an Exogenous Phenomenon (January 24, 2009). New Perspectives on Political Economy, Vol. 6, No. 1, pp. 31-48, 2010, Available at SSRN: https://ssrn.com/abstract=1749703

Nicolas Cachanosky (Contact Author)

The University of Texas at El Paso

500 West University Avenue
El Paso, TX 79968
United States

HOME PAGE: http://https://www.utep.edu/

American Institute for Economic Research

PO Box 1000
Great Barrington, MA 01230
United States

UCEMA Friedman-Hayek Center for the Study of a Free Society ( email )

Buenos Aires
Argentina

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