Finance, Advertising and Fraud: The Rise and Fall of the Freedman's Savings Bank

75 Pages Posted: 13 Apr 2021 Last revised: 14 Feb 2023

See all articles by Claire Celerier

Claire Celerier

University of Toronto - Rotman School of Management

Purnoor Tak

London Business School

Date Written: June 17, 2022

Abstract

We investigate how the Freedman's Savings Bank, the first bank collecting deposits from African Americans following Emancipation, attracted close to 100,000 depositors across 17 states within just a few years. We find that the bank promoted itself in newspapers more than any other bank. A textual analysis shows that the content of the advertising, which included false promises and a moralizing rhetoric, was also unique. This misleading advertising intensified with the fraudulent use of the deposit funds to the benefit of elite white networks, leading to the collapse of the bank and depositor losses rarely matched in history.

Keywords: History and Finance, Household Finance, Discrimination, Advertising

JEL Classification: D14, J15, G21, G51

Suggested Citation

Celerier, Claire and Tak, Purnoor, Finance, Advertising and Fraud: The Rise and Fall of the Freedman's Savings Bank (June 17, 2022). Proceedings of the EUROFIDAI-ESSEC Paris December Finance Meeting 2022, Available at SSRN: https://ssrn.com/abstract=3825143 or http://dx.doi.org/10.2139/ssrn.3825143

Claire Celerier (Contact Author)

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

Purnoor Tak

London Business School ( email )

Sussex Place
Regent's Park
London, London NW1 4SA
United Kingdom

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