Cambridge University Press 978-1-108-48988-1 — Banks on the Brink Mark Copelovitch , David A

Cambridge University Press 978-1-108-48988-1 — Banks on the Brink Mark Copelovitch , David A. Singer Index More Information

Index

3–6-3 plan, 2, 3 Bamberger, Ludwig, 142 bank failures, 1, 2, 4. See also banking Admati, Anat, 190, 191 crises; triggers of bank failures advanced economies in Canada, 100 banking crises in, 24–28 and securities markets, 7 and “global savings glut,” 184 triggers, 4 aggregate gross capital inflows, 31 Bank of Canada, 112, 117, 199 Alberta Stock Exchange, 110 Bank of Montreal, 94, 96 anti-Semitism, 20, 126, 183 Bank of Nova Scotia, 99–100 in Germany, 136, 140, 141, 143–45 Bank of Upper Canada, 94, 96, 97 “Manchesterism,” 142 bank runs, 3, 25, 88 and the Nazi regime, 153–55 banking crises, 2, 3, 4, 5, 6, 18, 22, 43, Arbeitsgemeinschaft der deutschen 44, 57, 64, 65. See also determinants Wertpapierbörsen (Association of of banking crises in OECD countries German Stock Exchanges), 159 Asian financial crisis, 4 Asian financial crisis, 4 bank concentration as determinant of, asset-backed commercial paper (ABCP), 175 59–63 asset price bubbles, 16 and capital inflows, 7, 33–34 asymmetric information, 8, 96 economic consequences of, 22, 23 Australia, 17, 25, 185, 198 “excess saving” view of, 20 authoritarian regimes, and banking and financial market structure, 41–42 crises, 23 GDP, impact on, 22–23 and global capital, 16 Bagehot, Walter, 181 and government debt, 22 bailouts, 2, 6 and government policy, 23 Commerzbank, 177 and gross capital inflows, 31–33 German, 124–25 in industrialized countries, 24–28 Special Fund for Financial Stability and market/bank ratio, 35–37 (Soffin), 175–76 models, 44–45 and the “too big to fail” problem, 194–96 and net capital flows, 29–31 Wells Fargo, 12 Panic of 1907, 4, 5

223

224 Index

partisanship as determinant of, 63–64 blue–sky laws, 106–8, 109, 112, 123 political consequences of, 23, 24 Boesky, Ivan, 116 precursors to, 16 “bonanzas,” 31, 57 and regulation, 74 bonds, 9–10, 35, 128 Reinhart-Rogoff classifications, 24 Bordo, Michael, 100 Reinhart-Rogoff definition, 26 Britain’s secondary banking crisis of the resolution costs, 22 1970s, 5 and the “too big to fail” problem, 194–96 Brustein, William, 141 banks. See also bailouts; bank failures; Bullard, James, 196 bank runs; banking crises; capital inflows; lending; structure of Caballero, Julián, 31, 45 national financial markets Calomiris, Charles, 98 asymmetric information, 8, 96 Fragile by Design, 188 balance sheet behavior, 67 Canada, 5, 7, 13, 14–15, 19, 20, 25, 35, capital adequacy, 73 76, 77, 88, 126, 130, 158, 161, 171, capital requirements, 190–93 179, 180, 182, 183, 187 chartering, 12 Alberta Stock Exchange, 110 competition from non-bank financial Bank Act (1871), 99, 100, 121 sector, 12 bank chartering, 94–95, 99 and government policy, 12 bank lending, 90–91 incentives to take on risk, 8, 11, 12 Bank of Nova Scotia, 99–100 insolvency risk, 66–73 banking in the nineteenth century, 95 leverage ratio, 120 Beauharnois Canal, 101 loan-loss provisions, 11 Big Five banks, 9 market/bank ratio, 35–37, 47 Black Tuesday, 110 “market-based,” 12 blue–sky laws, 107–9, 112, 123 maturity transformation, 3 capital inflows, 120 off-balance sheet activities, 11 Champlain and St. Lawrence Railroad, “panics,” 1 103 and securities markets, 9–10 Companies Act (1934), 113 size of as determinant of banking crisis, Constitution Act (1867), 92, 98, 106 59 Cornwall Canal, 101 trust in, 1 current account deficits, 119 Wells Fargo, 12 derivatives trading, 117–18 Baring crisis, 144 Dominion companies, 112 Basel Accords, 192 early settlers, 94 Basel Committee, 161, 166, 192 enforcement of market rules, 115, 117 Belgium, 88 Exchange Coffee House, 103 Bennett, Richard, 112 Expert Panel on Securities Regulation, Berlin, 155 114–15 centralization of German banking in, Free Banking Act (1850), 94 134–35 geography, 94, 101 Ritter and Blumenfeld scandal, 144 government policy for securities stock exchange, 135, 158 markets, 149 stock market crash, 136–37 Home Bank, 100 Bernanke, Ben, 184 insider trading, 115 Big Five banks, 9 “It’s Time,” 113 Big Three commercial banks, 151, 156, 169 joint-stock companies, 102–3 binning estimator, 58 Lachine Canal, 101 Black Tuesday, 110 mining industry, 102, 112 Blackbourn, David, 129 Montreal Stock Exchange, 103, 108

Index 225

Office of the Superintendent of cases, Lymburn v. Mayland, 112 Financial Institutions, 100 central banks, 4, 199–201 Ontario Bank, 100, 101 Bank of Canada, 112 Ontario Securities Commission Reichsbank, 134 (OSC), 114 chartering, 12 passport system, 114 Canadian banks, 95, 99 political origins of its securities Chateau Clique, 96, 98 markets, 101–6 Chile, 28 provincial organization of the banking China, 30 system, 94–97 Chinn, Menzie, 16, 185 provincial securities commissions, 115 Coffee, John, 145, 148 Quebec Conference of 1864, 98 Commercial Bank of Canada, 96 Rebellions of 1837, 98 Commerzbank, 20, 125, 151, 156, regulatory system, 92, 112, 113, 114, 176–77, 178 117, 122–23 acquisitions, 169 securities fraud, 109 commodities, 16 securities markets, 89–90, 118 competition between banks and securities St. Lawrence River, 101, 102 markets, 19, 24, 35, 43, 44 stock exchanges, 103, 104–5 blue-sky laws, 107–8 Toronto Stock Exchange, 108, 110 conditional impact of global market underdeveloped securities markets, 90 integration, 17 and the United States, 93 confidence in the banking system. See universal banking system, 121 crisis of confidence Welland Canal, 101 cooperative banks, 132, 157 Canadian Commercial Bank, 89 Deutsche Girozentrale (DGZ), 132 capital adequacy, 66, 73 credit, 2, 47. See also determinants of capital controls, 193–94 banking crises in OECD countries capital flow cycle, 16 and capital inflows, 64, 65, 66 capital inflows, 7, 9, 15–16, 17, 18, 19, 24, as determinant of banking crisis, 59, 65 25, 29, 34, 35, 41, 42, 43, 44, 45, loan-loss provisions, 11 56–57, 63–66, 67, 68, 73, 74, 92, and quality of bank lending, 73 181–82, 184, 185. See also crisis of confidence, 7 determinants of banking crises current account balances, 19, 29, 38, 46, 65 in OECD countries; structure of national financial markets Danzman, Sarah, 187 and banking crises, 33–34 Deeg, Richard, 132 to Canada, 120 deficits, 29 capital account surplus, 29 Canadian, 119 current account balances, 29 Denmark, stock markets, 35 to emerging market countries, 16 derivatives trading, 117–18 and exchange rate uncertainty, 46 determinants of banking crises in OECD gross flows, 31–33 countries, 44 gross portfolio inflows, 46 bank concentration, 59–63 net flows, 29–31 capital inflows, 45–65 portfolio flows, 31 control variables, 47–48, 57 reversal in “Asian tiger” economies, 184 credit boom/volume channel, 65 spikes, 58 current account balance, 46 sustained, 57 dependent variables, 45–46 and volume of credit, 64, 65, 66 domestic credit growth, 64, 65 capital requirements, 190–93 independent variables, 46–47 Carter, David, 45 market/bank ratio, 47

226 Index

net capital flows, 45–46 financial stability, 89. See also banking crises partisanship, 63–64 in Germany, 161–62 results of analysis, 48–56 and global imbalances, 184–87 robustness, 57–58 financialization, 9–10 size of the banking system, 59 Finanzplatz Deutschland, 20, 126–27, structure of national financial 147, 162–64, 165, 171, 173, 174–75, markets, 46 178, 179, 180, 183, 189 year-specific factors, 48, 56 floats, 111 Deutsche Bank, 20, 125, 129, 151, 156, foreign capital, 17, 19. See also capital 163, 177–78, 180 inflows acquisitions, 169 foreign direct investment (FDI), 31, 46 Deutsche Girozentrale (DGZ), 132 fragmentation Deutscher Bund, 134 of Canada’s regulatory system, 105, 188 disintermediation, 10 of financial regulation in Germany, 159 Dodd-Frank Wall Street Reform and of Germany’s banking system, 132 Consumer Protection Act (2010), of nineteenth century U.S. banks, 188 198, 201 France, 35, 118, 164, 174 domestic credit growth, 65 Frankfurt, 127, 133, 135, 158, 167 domestic financial market structure, 18, 24 Börse, 128 dot-com bubble, 186 Frankfurt Coalition, 164–66 Dresdner Bank, 125, 129, 156, 176 free trade, 140 Frieden, Jeffrey, 16, 185 economics, capital inflows, 7 functionalism, and financial market emergence of Germany’s “three pillar” development, 38 banking system, 128–32 Funke, Manuel, 23 Raiffeisenbank, 131 emerging market countries, 16, 184 Garrett, Geoffrey, 17 capital inflows, 16 Germany, 5, 14–15, 20, 25, 35, 76, 77, 88, Engels, Friedrich, 141 124, 179, 180, 182, 183 European Union (EU), 20, 162 adoption of the gold standard, 137 Single Supervisory Mechanism, 180 Aktiengesetz (Stock Corporation Act), Eurozone financial crisis, 25, 31 155, 156 “excess saving” view of financial crises, 30 anti-Semitism in, 136, 140, 141, 143, exchange rate, and capital inflows, 16 145, 183 bank failures, 124–25 Family Compact, 96, 98 Berlin, 134, 136–37, 138, 158 far -right political parties, and banking “Big Bank Act” of 1953, 156 crises, 23 Big Three commercial banks, 151, 156, Federal Deposit Insurance Corporation 164, 169, 171 (FDIC), 194–95, 198 Bundesaufsichtsamt für das Federal Reserve, 1, 38, 125, 148, 163, 184, Kreditwesen (BAKred), 167 186–87, 199 Bundesaufsichtsamt für den Federal Trade Commission, 122 Wertpapierhandel (BaWe), 167 Ferguson, Thomas, 150 clearinghouses, 132 finance capital, 129 collapse of Bankhaus Herstatt, 161 financial markets, 7, 18 collapse of the Weimar Republic, 152 national regulator, 20 commercial banks, 129, 130, 132, path dependence of, 13–14 134–35, 147, 151 political origins of, 12 Commerzbank, 125, 151, 156, 176–77, regulation, 20 178 trust in, 181 Conservative Party, 138

Index 227

cooperative banks, 131, 132, 151, 157 Public Company Act (1869), 142 Cooperative Law (1889), 131 Raiffeisenbank, 131 Credit Act (1934), 153–54 reform of securities markets, 166 Deutsche Bank, 125, 151, 156, 163, regulation of banking and finance 169, 180 under the Nazi regime, 153–55 Deutscher Bund, 134 Reichsbank, 129, 134, 148, 153 Dresdner Bank, 150, 152, 156, 176 Ritter and Blumenfeld scandal, 144 emergence of the “three pillar” banking Sachsen LB, 125 system, 128–32 securities markets, 158–61 finance in the postwar era, 160 Social Democratic Party, 138 financial crisis of 1931, 150–52 Sparkassen (savings banks), 131, 132, financial instability in, 125 151, 162 Financial Market Promotion Law, 166 Special Fund for Financial Stability Financial Market Promotion (Soffin), 175–76 Law II, 167 stability of its financial system, 161–62, Finanzplatz Deutschland, 20, 126–27, 171–79 162–64, 165, 166–71, 173, 174–75, stamp tax, 143–44 178, 179, 180, 183, 189 Stock Exchange Law of 1896 Frankfurt, 127, 128, 135, 158, 167 (Börsengesetz), 126, 136, 145–49, Frankfurt Coalition, 164–66 151, 152, 166 GmbH firms, 158 stock exchanges, 133, 159, 169 Golddiskontbank (Gold Discount stock markets, 35 Bank), 154 Tariff Act (1879), 140 Great Depression, impact on, 150 “three pillar” banking system, 125, Grossbanken, 146–47 133, 149, 157, 161 Imperial Stamp Act (1894), 144 trade protectionism, 139–40 industrial lending, 132 twenty-first century financial system, industry ties with banking, 129 171–79 interwar era, 126, 150–55 Union of Tax and Economic Reformers, “iron and rye” coalition, 143, 189 140 Jewish bankers, 140–41, 142 “universal banks,” 9, 146 joint stock banks, 128, 158 Westfälische Provinzialhilfskasse, 131 joint-stock companies, 135 WestLB, 124 Junker elite, 139–40 Zentralverband deutscher Industrieller, Landesbank Baden-Württemberg 139, 140 (LBBW), 125 Zollverein, 134, 140 Landesbanken (LB), 124, 131, 132, 157, Z-scores, 173 162, 165, 171, 174, 175 Gerschenkron, Alexander, 129 lending in, 169 Glagau, Otto, 142 “marriage of iron and rye,” 136, 139, Glass-Steagall Act, xvi, 18, 21, 196–98 140, 149 global capital, 15 Mittelstand, 124, 156, 157, 160, 163 global financial crisis, 88 National Liberal Party (NLP), 139, 142 global imbalance view of financial Nazi regime, 152–55 instability, 184–87 nineteenth century securities markets, 133 “global imbalances,” 29 Norddeutscher Bund, 134 global market integration, 17 origins of its financial system, 127–28 and partisanship, 17 Panic of 1873, 135, 136–39, 149 Golddiskontbank (Gold Discount Bank), political parties, 138, 139 154 postwar banking, 157, 161–62 governance, 38 private banks, 127 Securities and Exchange Commission, 91

228 Index

government debt, and banking crises, 22 interest groups, 20 government policy, 12, 18, 37, 40, 182. interest rates, 48, 95 See also domestic financial market international investment, 15. See also structure capital inflows; lending and banking crises, 23 International Monetary Fund (IMF), 125, free trade, 140 172, 194 Glass-Steagall Act, 18 New Database on Financial partisanship, 17 Reforms, 40 and securities markets, 13, 91 International Organization of Securities Great Depression, the, 5, 13, 88, 92, 93, Commissions (IOSCO), 115–16, 166 112, 147, 150, 197 investors, pooling, 110 Great Recession, the, 1, 5, 16, 17, 30, 57, Ireland, 174 76, 91, 184, 197 stock exchanges, 37 Great Western Railway, 97 “iron and rye” coalition, 143, 189 gross capital inflows, 31–33 “It’s Time,” 113 and banking crises, 45 gross domestic product (GDP), 31, 45, 46, Jackson, Andrew, 37 47, 48, 59. See also determinants of Jacobs, Alan, 92 banking crises in OECD countries Japan, 20, 25, 28, 118, 164 and banking crises, 22–23 Jay Cooke and Co., 137 gross portfolio inflows, 19, 33, 34, 38, 46, Jewish bankers, 140, 141. See also 48, 53, 55, 56, 58, 65 anti-Semitism Grossbanken, 141 joint-stock companies, 102–3 in Germany, 158–59 Haber, Stephen, 98 Jordà, Òscar, 31 Fragile by Design, 188 Hail, Luzi, 117 Kindleberger, Charles, 139 Hainmueller, Jens, 58 Kohl, Helmut, 166 Heinze, F. August, 4, 7 Korea, 28 Hellwig, Martin, 190, 191 Kulturkampf, 142 Hilferding, Rudolf, 129 Kushner, Jared, 177 Hitler, Adolf, 152. See also Germany Home Bank, 100 Laeven, Luc, 23 human capital, 10 Lambton, John (as Lord Durham), 97 Hungary, 34 Report on the Affairs of British North America, 98 Iceland, 28 Landesbank Baden-Württemberg Imperial Diet, 127 (LBBW), 125, 175 increasing bank capital requirements, Landesbanken (LB), 124, 131, 132, 157, 190–93 162, 165, 171, 174, 175 industrialized countries, 15, 29. See also bond issuance, 174 Canada; Germany; United Kingdom; quality of bank loans, 175 United States Sachsen LB, 124 banking crises in, 24, 25–28 Westfälische Provinzialhilfskasse, 131 capital account surplus, 29 WestLB, 124–25 capital inflows, 66 Z-score, 175 inflation, 47 Lasker, Eduard, 142 insider trading, 115 Latin American debt crisis, 26, 163 insolvency risk, 66–73 legislative politics, as determinant of Z-score, 67 banking crisis, 63–64 interbank lending, 4 Lehman Brothers, 3, 88

Index 229

lending, 7, 16, 65, 92, 129, 130, 199 national-level aggregates, 67 asymmetric information, 8, 96 nationalism, 183 in Canada, 91 Nazi Germany, 152–55, 183, 189. See also credit boom/volume channel, 65 Germany in Germany, 169 Credit Act (1934), 153 industrial, 133 net capital flows, 29–31, 33, 45–46, 55, 57 interbank, 4 and FDI, 31 leverage ratio, 120–21 New Brunswick, 94 maturity transformation, 3 New Zealand, 17, 25, 185, 198 quality of, 44, 73, 74 non-bank financial sector, 11 and securities markets, 10 Norddeutscher Bund, 134 Type 1 errors, 8 Northland Bank, 89 Type 2 errors, 8 Nova Scotia, 94 Leuz, Christian, 117 leverage ratio, 120–21 Oatley, Thomas, 187 linear probability models (LPM), 45, 48, 55 OECD countries, 45 loan-loss provisions, 11 measuring importance of securities logit models, 45, 48 markets in, 38, 40, 41 Long Depression, the, 135, 138, 143, 147 off-balance sheet activities, 11 Lower Canada, 93, 94 O’Malley, Martin, 198 Bank of Montreal, 94 Ontario Bank, 100, 101 Chateau Clique, 96, 98 Ontario Securities Commission (OSC), 114 Rebellions of 1837, 98 Luther, Martin, 128 Panic of 1873, 20, 126, 135, 136–39, 140, Lymburn v. Mayland, 112 143, 147, 148, 149, 161 causes of, 137 MacDonald, John A., 98 Panic of 1907, 1, 4, 7, 197 “Manchesterism,” 142 party politics, 17, 43 manipulation of stock markets, 111–12 as determinant of banking crisis, 23, 59, market structure, 18 63–64 market/bank ratio, 35–37, 47, 48, 55, 58, Social Democratic Party, 138 59, 63, 64, 68 passport system, 114 “marriage of iron and rye,” 136, 139, 149 path dependence of financial markets, maturity transformation, 3 13–14, 38 measuring, structure of national financial “patient capital,” 130 markets, 40 penny stocks, 111 Merkel, Angela, 180 Pöhl, Karl Otto, 165 Mittelstand, 124, 156, 157, 160, 163 policy. See government policy Molson, John, 102 policy recommendations, 21 Montreal Stock Exchange, 103, 108 capital controls, 193–94 Morck, Randall, 115 capital requirements, 190–93 re-introduction of Glass-Steagall, Nathan, Otto, 153 196–98 national banks, 11 for the “too big to fail” problem, 194–96 national financial markets, 9. See who should regulate, 199–202 also emerging market countries; political consequences of banking crises, industrialized countries; political 23, 24 history of national financial systems political history of national financial political history of, 13–14 systems, 13–14, 15, 19–20. See also National Liberal Party (NLP), 139, 142 Canada; Germany national regulator, 20 Canadian, 101–6

230 Index

pooling, 110 robustness analyses, 43, 64 Portes, Richard, 184 determinants of banking crises in portfolio flows, 31, 46 OECD countries, 57–58 post-Bretton Woods era, 24, 25, 28, 34, Rockoff, Hugh, 100 40, 42, 57, 65, 75, 77, 126, 158, Rogoff, Kenneth, 6, 22. See also 162, 179 Reinhart-Rogoff classifications Price, William H., 112 This Time Is Different, 16 private banks. See also emergence of Romer, Christina, 22 Germany’s “three pillar” banking Romer, David, 22 system rule of law, 37 German, 127, 131 Grossbanken, 146 Sachsen LB, 125 Prussia, 133, 137, 138, 139, 140, 141 savings and loan crisis of the 1980s, 5, 88 free trade, 140 Scandinavia, 28, 135, 139 Schularick, Moritz, 23, 31, 64, 65 quality of banks’ loan portfolios, 44, Securities and Exchange Commission, 73, 74 13, 91 Queens University, 97 securities fraud, 106, 109 insider trading, 115 Raiffeisenbank, 131 securities markets, 7, 12, 35, 43. See also Redish, Angela, 100 regulation reform of Germany’s securities arms-length nature of, 10 markets, 166 and bank failures, 7 regression analysis of determinants of and bank stability, 9–10 banking crises, results of, 48, 53–56 blue–sky laws, 106–9, 123 regulation, 20, 37, 74, 122, 189–90, in Canada, 89–90 199–202. See also Glass-Steagall Act Canadian, 119 Bundesaufsichtsamt für den development trajectory, 92 Wertpapierhandel (BaWe), 167 Finanzplatz Deutschland, 20 of Canadian securities markets, 92, German reform, 165–66 105–6, 111–12, 113, 114, 117, 122 in Germany, 158–61 Finanzplatz Deutschland, 166–71 and government policy, 12, 13, 91 fragmentation of, 159 market/bank ratio, 35–36, 47 “It’s Time,” 113 measuring importance of, 40 in Nazi Germany, 153–55 New Database on Financial Ontario Securities Commission Reforms, 40 (OSC), 114 non-bank financial sector, 11 and risk, 104–5 politics of, 37, 38 silo approach to, 201 regulation, 37 Reichsbank, 134, 148, 153 risk management, 10 Reinhart, Vincent, 6, 22 Stock Exchange Law of 1896 This Time Is Different, 16 (Börsengesetz), 144–49 Reinhart-Rogoff classifications, 24, 26, underdeveloped, 20 45, 53, 63 in the United States, 91 comparison with World Bank and “universal banks,” 9 classification, 28 Seligman, Joel, 107 resolution, and banking crises, 22–23 shorting stocks, 111 return on assets (ROA), 173 Singer, David Andrew, 192 Riesser, Jacob, 134, 148 Skilling, Jeffrey, 116 risk management, 10, 17, 104–5 Social Democratic Party, 138 Ritter and Blumenfeld scandal, 144–45 Spain, 27, 34, 56

Index 231

Sparkassen (savings banks), 130–31, 132, Sweden, 34, 56 151–58, 162 systemic banking crises, 25, 28, 33. Special Fund for Financial Stability See also banking crises (Soffin), 175–76 “systemic risk,” 11 stability of Germany’s financial system, 161–62, 171–79 Taylor, Alan, 31 Stata, interflex package, 58 Teles, Steven, 92 statistical analysis, 59, 75 Temin, Peter, 150 determinants of banking crises, results, Thatcher, Margaret, 163 48, 53–56 “three pillar” banking system, 133, 149, determinants of banking crises in 157, 161 OECD countries, 43, 44 emergence of, 128–32 Stewart, Martha, 116 Tier, 1 capital, 66, 67, 68, 73 stock exchanges Tilly, Richard, 149 American, 109 “too big to fail” problem, 21, 194–96 Arbeitsgemeinschaft der deutschen Toronto Stock Exchange, 108, 110 Wertpapierbörsen (Association of trade protectionism, 143 German Stock Exchanges), 159 Treaty of Versailles (1871), 140 Berlin, 135, 158 Trebesch, Christoph, 23 Canadian, 103–4, 105 triggers of bank failures, 6. See also floats, 111 capital inflows; structure of national Frankfurt, 128 financial markets German, 169 capital inflows, 7 pooling, 110 foreign capital, 19 stock markets, 35 Trump, Donald, 177 and bank failures, 7 Tucker, Paul, 100 blue–sky laws, 106–9, 123 in Canada, 90 underdeveloped securities markets, 43 insider trading, 115 in Canada, 90, 91–92 joint-stock companies, 102–3 United Copper Company, 4 manipulation of, 111–12 United Kingdom, 17, 25, 27, 88, 93, 101, market/bank ratio, 47 118, 127, 158, 161, 163, 174, 179 penny stocks, 111 “Big Bang,” 163 politics of, 37, 38 United States, 10, 13, 17, 22, 25, 27, 88, regulation, 37 89, 94, 95, 101, 127, 129, 137, 140, risk management, 104–5 158, 161, 164, 174, 179, 184, 187 and “universal banks,” 9 adoption of the gold standard, 137 Story, Jonathan, 158, 160 banking crises in, 7, 89 structure of national financial markets, blue–sky laws, 106–9, 123 8, 9, 29, 34, 35, 38, 43, 45, 46, 55, and Canada, 92–93 57, 64, 73, 74, 182. See also capital Civil War, 98 inflows; determinants of banking Coinage Act (1873), 137 crises in OECD countries current account deficits, 185 and banking crises, 41–42 Erie Canal, 101 as determinant of banking crisis, Federal Reserve, 38, 163, 184, problems with, 187–89 186–87, 199 measuring, 40 Federal Trade Commission, 122 variation in, 37 Financial Stability Oversight Council structured investment vehicles (SIVs), 175 (FSOC), 201–2 surpluses, 29–30 insider trading, 115 sustained capital inflows, 57–58 monetary policy, 186 Swank, Duane, 17 Panic of 1873, 137

232 Index

Securities and Exchange Commission, Warren, Elizabeth, 197 13, 91 wash trading, 111 securities markets, 91 welfare regimes, and global capital, 17 stock exchanges, 109 Wells Fargo, 12, 88, 101 stock markets, 35 Westfälische Provinzialhilfskasse, 131 “universal banks,” 9, 121, 135, 146 Winecoff, W. Kindred, 187, 200 Upper Canada, 93, 94 Wolf, Martin, 191 Bank of Upper Canada, 94 World Bank, 24, 45, 46 Rebellions of 1837, 98 Global Financial Development Database, 25–26, 47, 65 Valencia, Fabian, 23 World War II, 22, 77, 126, 155, 156. varieties of capitalism (VoC), 6–7, 93 See also Germany Volcker, Paul, 163 “Volcker Rule,” 198 Zentralverband deutscher Industrieller, von Bismarck, Otto, 138, 142, 143, 161 139, 140 Zollverein, 133, 140 Wall Street, 4 Z-score, 67–73, 175 Walter, Ingo, 158, 160 of German banks, 172–73