130 Years of American Finance

, Assistant Professor of Economics and Finance

This project aims to digitize approximately 1.2 million articles from American Banker, a trade magazine covering the US financial industry from 1890 to the present. This comprehensive archive will create a novel dataset to characterize the evolution of American finance over the last 130 years. Using data-driven techniques traditionally applied to the text of patents, we will measure innovativeness in the financial sector from the text of articles, distinguishing between innovations targeted towards wholesale markets (e.g. the creation of new securities and derivatives) and those targeted towards retail customers (e.g. the invention of the ATM or the credit card). We then characterize the drivers and consequences of financial innovation. Does innovation increase during times of “tight money” (e.g. high nominal rates), as financial institutions try to stay competitive in a tougher environment? Which kinds of innovations predict financial crashes, and which instead predict steady growth? How do innovation and regulation co-move over time?