Date of Original Version

1997

Type

Working Paper

Rights Management

All Rights Reserved

Abstract or Description

The financial history of the United States is marked by many large scale banking crises and large numbers of bank failures. An important reason for the large number of failures was the emphasis in law and practice on banks as local lenders. When local or regional crops (or industries) failed, local banks failed. Portfolios were insufficiently diversified to reduce risk optimally.

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