Journal of Financial Services Research

, Volume 6, Issue 2, pp 169–186 | Cite as

Bank lending ‘manias’ in theory and history

  • George Selgin
Article

Abstract

A popular view of banking crises sees them as consequences of prior bank lending “manias.” Such manias are supposed to be especially likely in legally unrestricted banking systems, where banks can issue notes and are not subject to statutory reserve requirements. Here it is argued that the bank lending mania hypothesis (1) exaggerates the role of subjective factors, including bankers' “confidence” or “optimism,” as a stimulus to bank lending, and (2) is not supported by evidence from past, legally unrestricted banking systems.

Keywords

Banking System Subjective Factor Bank Lending Reserve Requirement Popular View 

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Copyright information

© Kluwer Academic Publishers 1992

Authors and Affiliations

  • George Selgin
    • 1
  1. 1.Department of EconomicsUniversity of GeorgiaAthensUSA

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