| Insider Lending: Banks, Personal Connections, and Economic Development in Industrial New England Contributor(s): Lanoreaux, Naomi R. (Author), Lamoreaux, Naomi R. (Author) |
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ISBN: 0521460964 ISBN-13: 9780521460965 Publisher: Cambridge University Press OUR PRICE: $83.59 Product Type: Hardcover - Other Formats Published: June 1994 Annotation: Banks in early nineteenth-century New England functioned very differently from their modern counterparts. Most significantly, they lent a large proportion of their funds to members of their own boards of directors or to others with close personal connections to the boards. In Insider Lending, Naomi R. Lamoreaux explores the workings of this early nineteenth-century banking system - how and how well it functioned and the way it was regarded by contemporaries. She also traces the processes that transformed this banking system based on insider lending into a more impersonal and professional system by the end of the century. In the particular social, economic, and political context of early nineteenth-century New England, Lamoreaux argues, the benefits of insider lending outweighed its costs, and banks were instrumental in financing economic development. As the banking system grew more impersonal, however, banks came to play a more restricted role in economic life. At the root of this change were the new information problems banks faced when they conducted more and more of their business at arm's length. Difficulties in obtaining information about the creditworthiness of borrowers and in conveying information to the public about their own soundness led them to concentrate on providing short-term loans to commercial borrowers and to forsake the important role they had played early on in financing economic development. |
| Additional Information |
| BISAC Categories: - Business & Economics | Banks & Banking - Business & Economics | Management - General |
| Dewey: 332.175 |
| LCCN: 93032161 |
| Series: NBER Series on Long-Term Factors in Economic Development |
| Physical Information: 0.9" H x 6.32" W x 9.32" (1.05 lbs) 194 pages |
| Descriptions, Reviews, Etc. |
| Publisher Description: Today the term insider lending conveys an aura of abuse and corruption, of unethical, if not illegal, behavior. In early nineteenth century New England, however, insider lending was an integral aspect of the banking system. Not only was the practice an accepted fact of economic life, but, as Naomi R. Lamoreaux argues, it enabled banks (at least in this particular historical context) to play an important role in financing economic development. As the banking system evolved over the course of the century, however, lending practices became more impersonal and professional. |