Bank Rates of Return and Entry Restrictions, 1869–1914

Abstract

This article uses a variety of data in a simple regression framework to test various hypotheses about the regional differences in U.S. bank rates of return existing before 1915. We find that the observed pattern in the return differences is a function of the measures of bank returns used in previous studies, regional differences in economic conditions, restrictions on interstate branch banking, and private bank minimum capital requirements. These results are inconsistent with most of the bank monopoly-power hypotheses in the literature.