Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/302879 
Year of Publication: 
2024
Series/Report no.: 
IRENE Working Paper No. 24-05
Publisher: 
University of Neuchâtel, Institute of Economic Research (IRENE), Neuchâtel
Abstract: 
Using newly collected discount rate data for six Swiss cities, we find no evidence of increasing integration during a 30-year period of lightly regulated free banking. We attribute this to two structural issues: banks had incentives to protect their local monopolies, and the inherent instability of free banking meant that there was always a risk (which varied across banks) of a bank run. We use a novel counterfactual to show that these risks increased discount rate dispersion, and argue that as a result, public regulation of payments infrastructure was necessary for money market integration.
Subjects: 
Switzerland
discount rates
money market
financial integration
monetary union
19th century
JEL: 
E43
E44
F33
F45
N13
N23
Document Type: 
Working Paper

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