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I am absolutely thrilled that my paper on the Freedman’s Savings Bank is now up on the RFS website with their February (Black History Month!) “Accepted Manuscripts” release. A thread. 1/8 @RevOfFinStudies/1226884440330317824On twitter.com
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Mood +6 🙂
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The FSB opened 34 branches between 1865–70 to receive deposits “by or in behalf of persons heretofore held in slavery in the US, or their descendants.” By some measures it was the largest bank in the country, serving perhaps 1 in 8 African Americans. 2/ @smithsonianarch/828626813786193920Permalink On twitter.com
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To understand 𝘴𝘩𝘰𝘳𝘵 𝘳𝘶𝘯 effects of access to banking, we use variation in 𝘄𝗵𝗲𝗻 branches opened (some early, some late, some planned but never opened) and 𝘄𝗵𝗲𝗿𝗲 people lived relative to a branch. Matched account opening records to 1870 Census data from @ipums. 3/Permalink On twitter.com
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We show that families living near a branch (1) Were more likely to have an account (2) Had higher schooling, literacy, employment, income, business ownership, and real estate wealth We argue that access to the bank (1) 𝘤𝘢𝘶𝘴𝘦𝘥 those good outcomes (2). 4/Permalink On twitter.com
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The Bank had 𝘣𝘪𝘨 effects, fast. But maybe that shouldn’t be surprising; the FSB was a big deal! When the Bank collapsed following the Panic of 1873, depositors lost their savings. We find that even 𝗻𝗼𝘄, African Americans near FSB branches trust banks less. 5/Permalink On twitter.com
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There’s a lot more in the paper, including an alternative instrumentation strategy that relies on variation in Republicans’ political strength as a determinant of branch location. 6/ @Aliceyjun/1226926834287247360Permalink On twitter.com
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This all grew out of a conversation at a conference; Constantine had been visiting a Treasury building named after the Freedman Savings Bank (always @readtheplaque!) and remembered that back when we were in grad school together, I’d worked with related Census data. 7/Permalink On twitter.com
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We got a ton of great input and feedback, from our first discussant (@farzado) to the RFS’s amazing copyediting team (@JoyceIppolito). Also, the peer review and editorial process was as efficient as I’ve ever seen in econ/finance. Thank you! 8/ @lukestein/1168929743204507648Permalink On twitter.com
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PS [“director’s cut”]: Depositors’ losses during collapse weren’t just due to a generic banking panic; the FSB’s (white) directors seem to have invested bank funds in ventures run by their friends/family. Only some depositors got out in time👇 9/8 @lukestein/1227246612579176448Permalink On twitter.com
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The FSB collapse occurred before deposit insurance, but there was a longstanding effort to secure government funds to reimburse depositors. To the (limited) degree these efforts were successful, this was a very early “bank bailout.”) 10/8 @lukestein/1227252116709752835Permalink On twitter.com
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Focus of 𝘵𝘩𝘪𝘴 paper is really only short-run effects of the FSB (for various reasons), but we think the long-term, intergenerational effects are very interesting and important. I know Rick Hornbeck voices.uchicago.edu/richardhornbeck/ is also working on this. 11/8 @EconZach/1227248298857304072Permalink On twitter.com
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Last tweet: I really appreciate the interest and attention in our paper. I know not everyone has access to journal subscriptions; if you’d like a copy of the paper and can’t easily get one please just send me a DM!Permalink On twitter.com
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