Canadian History of Economics

Canadian History of Economics

The very fact that New England 's unit banking system was declining in its profitability during the late nineteenth century was the main reason why American banks started searching for new ways to improve their existing competitive environment . Merging was the best alternative to reached desirable objective . With the arrival of merges bigger banks got extra advantages over their smaller rivals that had very low chances to outperform their bigger rivals . Though there was little change in the structure of the banking system during this period , we can

see that merges introduced significant changes into banking structure and overall profitability of American banks

In the course of analyzing Lamoreaux 's article , I will prove that mergers and restructuring of banking sector helped to introduce radical changes in the region . In the course of his analysis , Lamoreaux (1991 argues that individuals within businesses might have disparate interests thus give different responses to impending challenges that might occur in this industry . Therefore , it is very important to examine the distribution of power within this organization . Additionally , legal arrangements that might reduce the conflict of interest between a firm 's ownership and its managers will have an impact on the extent of the institutional change that the company is likely to undergo . These hypotheses Lamoreaux (1991 ) subjects to a test using bank mergers in late nineteenth century New England

In developing her argument , Lamoreaux (1991 ) observes that after the Civil War , banks with high ratios of deposits to capitals...