Institutional Resilience in Banking Systems


18 Pages Posted: 2 Dec 2018 Last revised: 7 Feb 2019

See all articles by Alexander William Salter

Alexander William Salter

Texas Tech University - Rawls College of Business; American Institute for Economic Research

Date Written: February 5, 2019


This is a condensed version of Salter and Tarko (2018), presented at the Austrian Economics in the 21st Century conference in Rosario, Argentina. I argue that current perspectives on banking and financial regulation, including newly popular proposals for macroprudential regulation, cannot achieve their objective. Admittedly banking and financial systems need to be governed, to overcome collective action problems that can hinder the stability of the system. But this stability can be an endogenous feature of self-regulation. I contend that the governance institutions in historical free banking systems succeeded in making those systems resilient. These institutions permit us to classify free banking systems as polycentric systems for banking and financial governance.

Keywords: Banking, Finance, Financial Crisis, Free Banking, Macroprudential, Polycentricity

JEL Classification: E52, E58, G28, P12

Suggested Citation

Salter, Alexander William, Institutional Resilience in Banking Systems (February 5, 2019). LIBERTAS: SEGUNDA ÉPOCA, Forthcoming. Available at SSRN: or

Alexander William Salter (Contact Author)

Texas Tech University - Rawls College of Business ( email )

Lubbock, TX 79409
United States


American Institute for Economic Research

PO Box 1000
Great Barrington, MA 01230
United States

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