Journal of Financial Economics Vol. 145 No. 1 2022
When Uncle Sam introduced Main Street to Wall Street: Liberty Bonds and the transformation of American finance
open access
Abstract
We study the effects of the Liberty Bond drives of World War I on financial intermediation in the 1920s and beyond. Using panel data on US counties, and an instrument that captures differences in the approaches used to market the bonds, we find that higher Liberty Bond subscription rates led to an increase in investment banks and a contraction in commercial bank assets. We also find that in the late 1930s, individuals residing in states where Liberty Bond subscription rates had been higher were more likely to report owning stocks or bonds. Although they were conducted to support the American effort in World War I, these bond drives reshaped American finance.
- DOI
- 10.1016/j.jfineco.2021.06.043
- Volume
- 145
- Issue
- 1
- Pages
- 194-216
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref