Chapter

New England

Howard Bodenhorn

in State Banking in Early America

Published in print December 2002 | ISBN: 9780195147766
Published online November 2003 | e-ISBN: 9780199832910 | DOI: http://dx.doi.org/10.1093/0195147766.003.0004
New England

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New England banks were smaller than banks in other regions of the United States and they were more likely to be run by families. The region's banks were not impersonal dispensers of credit in anonymous markets. Rather, they were formed and served as the financial arms of extended kinship networks of several interrelated businesses. The insider nature of New England's small banks resolved a number of information asymmetry and agency problems. Small groups of large shareholders were well‐positioned to evaluate the prospects of borrowers and provided effective monitoring of bank management.

Keywords: agency; asymmetric information; bank management; borrowers; families; insiders; kinship networks; monitoring; New England; shareholders

Chapter.  10765 words. 

Subjects: Economic History

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