Historical environments and the transformation of twentieth-century United States banking.

The core claims of this dissertation are that (1) the relationship between organizations and their external environments is historically contingent and (2) there are enduring effects of founding environments on organizations. I study the transformation of the US commercial banking industry in the twentieth century and examine how changes in institutional, technical and economic environments resulted in changes in banking organizations, and conversely how banking organizations influenced their institutional and economic environments. The dissertation consists of three empirical studies. First, I examine how legal and technical environments influenced the growth of the banking industry and the late-twentieth-century acquisition wave. I find that restrictive laws lead to smaller state-level banks and liberal laws have a positive effect on size and that both of these effects are accentuated as technical environments become more advanced and banks are able to grow by branching. Furthermore, I find that the legal and technical environments during bank founding have a persistent effect on later bank growth. Banks that were founded in locations where branching was legally and technically possible were more likely to subsequently acquire other banks. In my second paper, I examine the effect of banking organizations and external environments on whether or not states pass more liberal or more restrictive banking laws. I find that as state wealth and transportation infrastructure increase and the Federal government has a more liberal policy, the effect of multi-unit banks on liberalization increases. Conversely, for single-unit banks, the most important factor contributing to restrictive changes is the degree to which neighboring states have restrictive branching laws. In my third paper, I suggest that the founding of banks is a result of bankers' expressing their professional identity in the wake of acquisitions in their local community. My analyses indicate that in addition to local economic and ecological factors, the local population of finance professionals and the extent of free banking labor are also important to understand where and when banks are founded.PhDBankingManagementSocial SciencesSocial structureUniversity of Michigan, Horace H. Rackham School of Graduate Studieshttp://deepblue.lib.umich.edu/bitstream/2027.42/125158/2/3186701.pd