Land and Credit: A Study of the Political Economy of Banking in the United States in the Early 20th Century Web Appendix Raghuram G. Rajan University of Chicago Rodney Ramcharan International Monetary Fund
Table I WA. Bank Density and Land Concentration, OLS Estimates Dependent Variable (1) (2) (3) (OLS) (OLS) (OLS) Capita Capita 1930 Capita (County Fixed Effects) Land Concentration -110.86*** -63.44*** -141.00*** [10.30] [5.33] [34.6] County Area (log) -0.11-1.71* --- [0.98] [0.70] --- Distance from Mississippi (log) 3.79*** 1.55* --- [0.80] [0.60] --- Distance from Atlantic (log) -1.09-0.17 --- [0.72] [0.52] --- Distance from Great Lakes (log) 4.45 2.89 --- [2.41] [1.66] --- Distance from Pacific (log) 1.44 1.67 --- [2.25] [1.61] --- Observations 2907 2934 6036 Robust standard errors in brackets. ***,**,* denotes significance at the 1, 5 and 10 percent levels. Columns 1 and 2 include state dummy variables these are absorbed in the county fixed effects in column 3. All coefficients multiplied by 100,000.
Table IIA WA. Land Concentration and Bank Density, IV Estimates. (i) (ii) (iii) (iv) (v) (vi) Instruments Land Concentratio n (1890), Std Deviation Dependent Variable Capita Capita Capita 1930 km 1930 Capita Capita Land Concentration -481.041*** -496.036*** -234.706** -4712.885*** -78.683* -465.171*** [109.728] [122.248] [79.323] [1222.766] [34.881] [101.090] County Area (log) -1.033-2.14-1.976-499.693*** 2.28* -1.832 [1.768] [2.231] [1.208] [39.366] [1.154] [2.018] Distance from Mississippi (log) Distance from Atlantic (log) Distance from Great Lakes (log) Distance from Pacific (log) Illiterate population share Urban population share Log of Total Population African-American population share Youth population (7-20) share -2.131-0.595 0.8084 17.852 3.357*** -0.3312 [2.571] [2.121] [1.051] [24.783] [0.824] [1.668] -14.391** -13.539** -4.158* -145.991** 0.9691-12.494*** [4.728] [5.063] [2.389] [50.634] [1.320] [3.991] 8.879*** 8.486** 3.357* 47.66 1.389 7.961** [2.443] [2.989] [1.594] [49.880] [1.146] [2.673] -10.214-10.458-4.722 28.167 0.4398-9.557 [6.426] [6.697] [4.107] [56.391] [3.236] [6.132] 55.618 32.317 1606.574** -81.822*** 45.35 [56.275] [37.269] [557.066] [16.199] [45.727] -0.1514-0.2379*** 0.2726-0.3722*** -0.1641** [0.076] [0.040] [0.879] [0.038] [0.069] 1.775 1.757 494.818*** -4.371*** 1.272 [2.713] [1.690] [36.844] [1.171] [2.467] 8.89 5.503-196.931 19.732*** 9.492 [12.089] [6.057] [125.145] [5.226] [9.362] -111.728* -194.95*** -4708.142*** -197.733*** -113.118* [55.361] [34.332] [676.398] [27.926] [61.351] Observations 2907 2907 2934 2907 2573 2907 Spatially corrected standard errors in parenthesis. ***, **, * denote significance at the 1, 5 and 10 percent respectively. All specifications include state dummies.
Table IIB WA. Land Concentration and Bank Density, First Stage Estimates. (1) (2) Dependent Variable Land Concentration in Land Concentration in 13.90** 13.00*** [2.46] [2.28] County Area (log) 3.23-61.10* [30.50] [31.60] Distance from Mississippi (log) -117.00** -50.60** [22.70] [21.40] Distance from Atlantic (log) -352.00*** -330.00*** [31.20] [32.20] Distance from Great Lakes (log) 106.00*** 158.00*** [30.80] [27.60] Distance from Pacific (log) -213.00** -192.00** [91.30] [82.30] Illiterate population share 3370.00*** [471.00] Urban population share 5.10*** [0.86] Log of Total Population 129.00*** [25.80] African-American population share -201.00 [140.00] Youth population (7-20) share 111.00 [637.00] Observations 2907 2907 R^2 0.0944 0.2129 Spatially corrected standard errors in parenthesis. ***, **, * denote significance at the 1, 5 and 10 percent respectively. All specifications include state dummies.
Figure 1 WA. Banks Per Capita and Land Concentration: A Semi-Parametric Estimator Figure 1 re-estimates column (ii) of Table 2A treating land concentration as a nonlinear function of banks per capita within a partial linear model. These results are obtained using 10 th order differencing based on Yatchew (2003) weights.
Table III WA. Additional Geophysical Controls. Dependent Variable: Banks Per Capita,. (1) (2) (3) (4) IV IV OLS OLS Land Concentration -44.5*** -40.5*** 317.00*** 382.00*** (9.63) (7.5) (65.60) (58.70) () -0.532*** -0.34*** (0.08292) (0.0794 (Standard Deviation) -0.500** -0.407 (0.2281) (0.21) Growing degree days () -0.000817 0.00349** (0.00176) (0.00154) Growing degree days (Standard Deviation) 0.00319 0.00605*** (0.00251) (0.00223) Frost Days () 0.0454 0.0865 (0.05156) (0.0464) Frost Days (Standard Deviation) -0.141-0.0258 (0.1178) (0.0979) Elevation (Mean) -0.0113*** -0.000397 (0.004174) (0.00434) Elevation (Standard Deviation) -0.0162* -0.0117 (0.01031) (0.0104) Growth in Real Value of Crops 1860-1910 () 0.00476 (0.00975) Growth in Real Value of Crops 1860-1910 (Standard Deviation) -0.0152*** (0.00539) Growth in Real Value of Livestock 1860-1910 () 0.0574** (0.0248) Growth in Real Value of Livestock 1860-1910 (Standard Deviation) 0.0249 (0.016) Observations 2907 1873 2907 2907 All standard errors adjusted for spatial correlation. ***,**,* denotes significance at the 1, 5 and 10 percent levels. All specifications include state dummy variables and geophysical controls: land area and distances from Atlantic, Pacific, Mississippi and Great Lakes (in logs), as well as demographic controls: illiterate, urban, African-American and young (ages 7-20) population shares, and log of total population.. All coefficients multiplied by 100,000. Columns 3 uses elevation (standard deviation) and instrument; column 4 uses both elevation (standard deviation) and average rainfall as instruments. The Hansen J-Statistic is 3.60 with a p-value of 0.06.
Table IV WA. as a Proxy for Demand Side Factors Dependent Variable: Banks Per Capita,. (1) (2) (3) (4) Instruments Dependent Variable Capita Capita Capita Capita Land Concentration -426.05*** -510.50* -480.71*** -486.84*** [112.32] [227.86] [120.67] [121.57] Price Per Acre of land (log 8.58*** [2.19] Farm Size (log) -1.88 [7.52] Farms (log) -11.43 [7.91] Homes owner occupied share -18.33 [12.89] productivity of land (log) 2.20 [2.17] Observations 2907 2907 2906 2907 All standard errors adjusted for spatial correlation. ***,**,* denotes significance at the 1, 5 and 10 percent levels. All specifications include state dummy variables and geophysical controls: land area and distances from Atlantic, Pacific, Mississippi and Great Lakes (in logs), as well as demographic controls: illiterate, urban, African-American and young (ages 7-20) population shares, and log of total population.. All coefficients multiplied by 100,000.
Table V WA. Land Concentration Working Through Other Channels: Farms Sizes and Value Dependent Variable: Banks Per Capita, (1) Instruments Dependent Variable Capita Land Concentration -404.78*** [88.85] Farms between 3-9 acres, as share of total farm acreage Farms between 10-19 acres, as share of total farm acreage Farms between 20-49 acres, as share of total farm acreage Farms between 50-99 acres, as share of total farm acreage Farms between 100-174 acres, as share of total farm acreage Farms between 175-259 acres, as share of total farm acreage Farms between 260-499 acres, as share of total farm acreage Farms between 500-999 acres, as share of total farm acreage 0.11*** [0.02] -0.01 [0.01] -0.02*** [0.01] 0.00 [0.01] -0.05*** [0.01] 0.06*** [0.02] 0.00 [0.01] -0.04 [0.02] Price Per Acre of land (log) Observations 2907 All standard errors adjusted for spatial correlation. ***,**,* denotes significance at the 1, 5 and 10 percent levels. All specifications include state dummy variables and geophysical controls: land area and distances from Atlantic, Pacific, Mississippi and Great Lakes (in logs), as well as demographic controls: illiterate, urban, African-American and young (ages 7-20) population shares, and log of total population.. All coefficients multiplied by 100,000.
Table V WA(Cont d). Land Concentration Working Through Other Channels: Crops, Southern States and Education Dependent Variable: Banks Per Capita (2) Crops (3) Southern States (4) Upper Mid Western States (5) 1930 Education Land Concentration -538.00*** -374.24** -305.64*** -230.93*** (116.01) (171.97) (66.34) (61.06) Per capita education expenditures (log) 22.40** (10.20) Value of fruits, as share of total crop values 0.716*** (0.235) Value of cerals, as share of total crop values 0.099 (0.0715) Value of vegtables, as share of total crop values 0.47*** (0.171) Value of other grains and seeds, as share of total crop values 0.0705 (0.146) Value of field crops (sugar, cotton), as share of total crop values -0.0873 (0.0778) Observations 2906 1288 1047 2934 All standard errors adjusted for spatial correlation. ***,**,* denotes significance at the 1, 5 and 10 percent levels. All specifications include state dummy variables and geophysical controls: land area and distances from Atlantic, Pacific, Mississippi and Great Lakes (in logs), as well as demographic controls: illiterate, urban, African-American and young (ages 7-20) population shares, and log of total population.. All coefficients multiplied by 100,000. The sample in coloumn 4 is the Upper Mid West (US Census East North Central and West North Central Classification) and includes Illinois, Indiana, Michigan, Ohio, Wisconsin, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, and South Dakota. The sample in column 3 is the Southern and Border states: Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, North Carolina, South Carolina, Texas, Virginia, Kentucky, Maryland, Oklahoma, Tennessee, and West Virginia.
Table VI WA. The Influence of Landed Interests: Distance from State Capitals All Banks Per Per Capita, State Banks Per Per Capita, National Banks Per Per Capita, (1) (2) (3) Instruments Dependent Variable Capita State Capita National Capita Land Concentration -973.79** -719.28** -180.30 [441.39] [326.55] [109.99] Land Concentration * Distance to state capital 1.62 1.36** 0.12 [1.02] [0.76] [0.26] Distance to state capital -0.78-0.67** -0.05 [0.50] [0.37] [0.13] Distance to state capital Squared 0.0003 0.0003** 0.0000 [0.0003] [0.0002] [0.0001] Observations 2907 2907 2907 All standard errors adjusted for spatial correlation. ***,**,* denotes significance at the 1, 5 and 10 percent levels. All specifications include state dummy variables and geophysical controls: land area and distances from Atlantic, Pacific, Mississippi and Great Lakes (in logs), as well as demographic controls: illiterate, urban, African-American and young (ages 7-20) population shares, and log of total population.. All coefficients multiplied by 100,000.
Table VII WA. The Influence of Landed Interests: State Versus National Banks (1) (2) (3) Instruments Dependent Variable National Capita, State Capita, National Bank Share, Land Concentration -138.26*** -336.24*** -1.39** [41.24] [90.65] [0.70] Observations 2907 2907 2868 All standard errors adjusted for spatial correlation. ***,**,* denotes significance at the 1, 5 and 10 percent levels. All specifications include state dummy variables and geophysical controls: land area and distances from Atlantic, Pacific, Mississippi and Great Lakes (in logs), as well as demographic controls: illiterate, urban, African-American and young (ages 7-20) population shares, and log of total population. All coefficients multiplied by 100,000.
Table VIII A WA. Default Experience: Suspended deposits, banks per capita and land concentration, IV Regressions. Dependent variable: Fraction of Suspended State Bank Deposits 1931-36 (1) (2) (3) (4) State Banks Per Capita With outliers Without outliers 15193.3 29877.4** [15314.5] [12591.6] Without outliers Without outliers State Banks Per Capita 1930 66586.7** [30210.2] Land Concentration() -138.2** [67.3] Observations 2702 2568 2587 2587 In column 1 all observations are included, in columns 2-4, outliers are dropped using the Huber biweighting procedure. Table VIIIB WA. Default Experience: Suspended deposits, banks per capita and land concentration, IV Quantile Regressions. Dependent variable: Fraction of Suspended State Bank Deposits 1931-36. (1) (2) (3) State Banks Per Capita 18834.3* [10726.7] State Banks Per Capita 1930 53479.2 [35599.0] Land Concentration() -86.44* [45.3] Observations 2702 2721 2721
Table VIIIC WA. Default Experience: Suspended deposits, banks per capita and land concentration, further robutness checks. Dependent variable: Fraction of Suspended State Bank Deposits 1931-36. Without outliers Without outliers Without outliers Without outliers (1) (2) (3) (4) State Banks Per Capita 57693.7** 25537.6* 33201.5** 24105.2* [21787.2] [13367.7] [13725.2] [14076.4] Farm Size (log) -7.032** [2.8] Farms (log) -1.688-0.386 [1.5] [1.1] productivity of land (log) 2.562* [1.2] Homes owner occupied share 12.95 [8.2] Price Per Acre of land (log) 2.948* [1.4] Observations 2568 2568 2568 2568 In columns 1-4, outliers are dropped using the Huber bi-weighting procedure. Spatially corrected standard errors in parenthesis in Tables 8A and 8C, bootstrapped standard errors in Table 8C. ***, **, * denote significance at the 1, 5 and 10 percent respectively. All specifications include state dummy variables and geophysical controls: land area and distances from Atlantic, Pacific, Mississippi and Great Lakes (in logs), as well as demographic controls: illiterate, urban, African-American and young (ages 7-20) population shares, and log of total population.