Bank networks and systemic risk: Evidence from the national banking acts

Haelim Anderson, Mark Paddrik, Jessie Jiaxu Wang

Research output: Contribution to journalArticlepeer-review

22 Scopus citations


The National Banking Acts (NBAs) of 1863-1864 established rules governing the amounts and locations of interbank deposits, thereby reshaping the bank networks. Using unique data on bank balance sheets and detailed interbank deposits in 1862 and 1867 in Pennsylvania, we study how the NBAs changed the network structure and quantify the effect on financial stability in an interbank network model. We find that the NBAs induced a concentration of interbank deposits at both the city and bank levels, creating systemically important banks. Although the concentration facilitated diversification, contagion would have become more likely when financial center banks faced large shocks.

Original languageEnglish (US)
Pages (from-to)3125-3161
Number of pages37
JournalAmerican Economic Review
Issue number9
StatePublished - Sep 2019

ASJC Scopus subject areas

  • Economics and Econometrics


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