Three Essays in Financial Economics and Economic History

Abstract

America’s financial system has evolved through innovation, regulation, and economic shocks. This dissertation explores two economically important events, one historical and one modern, impacted the banking system. The first chapter analyzes banks' responses to labor market disruptions following the passage of Permanent Normal Trade Relations with China in 2000. Using call reports and local surveys of banks’ deposit footprints in various difference-in-difference regressions, I show that banks exposed to local labor market disruptions through their deposit bases faced asset quality and deposit supply shocks. Impacted banks reduced small business lending and increased mortgage securitization, especially outside their home markets. The second chapter examines the early impact of the Second Bank of the United States, a quasi-central bank chartered from 1816 to 1836, on state-chartered banks. The data show that public deposit withdrawals mandated by the Treasury weakened these banks and hindered later development. The final chapter digitizes late 18th-century postal road networks, revealing how their expansion fostered growth in banks and insurance firms. This chapter connects the growth of information networks with the expansion of firms reliant on information flows. Together, these essays demonstrate banks' vulnerability to funding shocks and the benefits of enhanced information dissemination.