Value Creation From the National Bank Charter: Historical Reflections on the Complementarity of Examinations and Market Discipline

Abstract

Historically, national banks have faced stricter prudential standards than most state-chartered banks. Why do some banks prefer stricter regulation and choose to be federally chartered? They gain from the credibility that stricter regulation and supervision creates in the market. This is illustrated by the recovery of temporarily closed national banks after the Panic of 1893, and by their long-run ability to compete for deposits during the rise and fall of state deposit insurance schemes in the early twentieth century.

Author

Charles W. Calomiris