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Financial Market and Industry Structure:A Comparison of Banking and Textile Industry between Boston and Philadelphia in Early Nineteenth Century : 

Financial Market and Industry Structure:A Comparison of Banking and Textile Industry between Boston and Philadelphia in Early Nineteenth Century Ta-Chen Wang California State University, Sacramento 2008 Gavin Wright Fest

Motivation : 

Motivation Financial system and economic performance Focus on growth rate 19th century American development Divergent paths to industrialization New England Philadelphia Question: What caused the different route to industrialization 2008 Gavin Wright Fest

Industrial Development : 

Industrial Development New England and Philadelphia Difference in Size Organization forms Labor quality/sources Product Financing sources Capital accumulation process 2008 Gavin Wright Fest

What caused the difference? : 

What caused the difference? Artisanal tradition Culture The role of merchants Other factors

Banking : 

Banking Parallel Divergence in banking State charter policies Bank capital and assets Banking practices Was there a relationship? 2008 Gavin Wright Fest

Banking Development : 

Banking Development New England Numerous smaller banks Ease of entry Relatively consistent growth in number of banks Practice Lamoreaux, insider lending Engines of industry 2008 Gavin Wright Fest

Entry Policy : 

Entry Policy New England, de facto free entry Pennsylvania Omnibus Act of 1814, large number of banks Lagged behind, especially after 1819 Heavily hit again after 1837 2008 Gavin Wright Fest

Number of banks : 

Number of banks 2008 Gavin Wright Fest Source: Weber (2008)

Total amount of loan : 

Total amount of loan 2008 Gavin Wright Fest

Sizes of banks : 

Sizes of banks 2008 Gavin Wright Fest

Bank lending per capita : 

Bank lending per capita 2008 Gavin Wright Fest Source: Weber (2008)

Lending Practices : 

Lending Practices New England Insider lending Middle-Atlantic States: broader clientele? Duration of loans Are Mid-Atlantic banks more real-bills banks? Less frequent renewals 2008 Gavin Wright Fest

Average loan to capital ratio : 

Average loan to capital ratio 2008 Gavin Wright Fest

Next Steps : 

Next Steps Banking practices Evidence from balance sheet data Changes in the industrial landscape Esp. Philadelphia Explore the common factors that affects both 2008 Gavin Wright Fest

Challenges : 

Challenges Merchant participated in banks but not textile Why not if profitable? Exogenous shocks and bank failure? Crisis of 1819 Charter policy? Endogeniety of banks Demand side? Competition of textile industry 2008 Gavin Wright Fest

Implications : 

Implications Role of banks in economic development Banks caused development? In what sense? Philadelphia could overcome the lack of bank credit 2008 Gavin Wright Fest