The Political Economy of Financial Regulation: Evidence from U.S. State Usury Laws in the 19th Century

@inproceedings{Benmelech2007ThePE,
  title={The Political Economy of Financial Regulation: Evidence from U.S. State Usury Laws in the 19th Century},
  author={Efraim Benmelech and Tobias J. Moskowitz},
  year={2007}
}

• Efraim Benmelech, Tobias J. Moskowitz
• Published 2007
• DOI:10.1111/j.1540-6261.2010.01560.x

We investigate the causes and consequences of financial regulation by studying the political economy of U.S. state usury laws in the 19th century. We find evidence that usury laws were binding and enforced and that lending activity was affected by rate ceilings. Exploiting the heterogeneity across states and time in regulation, enforcement, and market conditions, we find that regulation tightens when it is less costly and when it coexists with other economic and political restrictions that… CONTINUE READING

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