Insights from Newly Digitized Banking Data, 1867-1904

Stephan Luck and Sergio Correia

Call reports—regulatory filings by which business banks report their belongings, liabilities, earnings, and different data—are one of many most-used information sources in banking and finance. Although name reviews had been collected way back to 1867, the underlying information are solely simply accessible for the current previous: the mid-Eighties onward within the case of the FDIC’s FFIEC call reports. To assist researchers look farther again in time, we’ve begun creating a whole digital file of this “lacking” name report information; this information launch covers 1867 via 1904, the majority of the Nationwide Banking Period. Right here, we describe the digitization course of and spotlight a number of the fascinating options of that period from a analysis perspective.

Supply Materials

The unique supply of name report information is the Workplace of the Comptroller of the Forex (OCC), which revealed nationwide banks’ stability sheets in its Annual Report back to Congress (see the exhibit beneath for an instance of such a stability sheet).

Whereas not as detailed as modern regulatory filings such because the FDIC’s name report or the Federal Reserve’s Y-9C, the OCC’s name report is surprisingly granular. For example, on the asset facet, the decision report requested banks to report what number of excellent loans and reductions had been made, how a lot money and governments bonds they’re holding, and the way a lot credit score is offered to different banks on the interbank market. On the legal responsibility facet, the decision report paperwork how a lot fairness shareholders have invested within the financial institution, how a lot deposit funding the financial institution has raised, and the quantity of financial institution notes issued by the financial institution. The OCC’s name report additionally documented every financial institution’s location, president, and cashier and assigned a novel constitution quantity to every financial institution, enabling us to assemble a panel.

The Steadiness Sheet of Nationwide Metropolis Financial institution

Digitization Course of

We compiled the information by combining optical character recognition (OCR) methods with trendy format separation methods to establish the weather of a desk. (See our research paper for extra on the right way to gather historic information utilizing OCR.) In the end, we created a knowledge set containing greater than 110,000 annual nationwide financial institution stability sheets for greater than 7,000 distinctive nationwide banks, overlaying the years 1867 to 1904. The standard of the information is sort of excessive. The accuracy may be examined by checking whether or not the sum of all belongings is the same as the sum of all liabilities, which happens in additional than 99 p.c of all bank-year observations.

As well as, we augmented the information set with a number of further variables. To trace banks throughout time, we created a novel financial institution identifier containing every financial institution’s unique constitution quantity, as constitution numbers typically modified on constitution renewal. We documented when a financial institution goes out of enterprise utilizing further data from the OCC, and distinguished between kinds of closures, resembling receiverships and voluntarily liquidations. Additional, we collected data on the situation of every financial institution, recording the related metropolis, state, and geographic coordinates.

What Can We Be taught from the Nationwide Banking Period?

How can this historic information assist researchers develop their understanding of banking and monetary intermediation?

The Nationwide Banking Period, which spans the interval between the Civil Struggle and the founding of the Federal Reserve System (roughly 1863 to 1913), is an thrilling laboratory for empirical banking analysis. The tip of the nineteenth century was an vital part in world historical past, with globalization, the trendy company, and financial progress all taking off on the similar time. This was additionally a interval of quick progress and speedy westward enlargement for the U.S. banking system, as proven within the animated map beneath.

Progress of Nationwide Banks throughout Area and Time

Not like trendy banks, nationwide banks had been capable of challenge financial institution notes, however they in any other case operated a lot as banks do immediately, taking deposits and making loans. The regulatory regime of the interval, nevertheless, was decidedly totally different. For example, banks’ geographic footprint was closely restricted, principally confining them to the native market, and financial institution capital necessities posed a barrier to entry for potential opponents fairly than a restriction on leverage for incumbent corporations. In previous research, we exploited each of those regulatory peculiarities to make clear basic questions relating to the consequences of banking competitors.

Sharing the Information

This submit marks the general public launch of this data set. Our present digitization begins in 1867, the primary yr by which full stability sheets had been included within the Report back to Congress, and stops in 1904, the final yr earlier than a change within the format of the report.

Stephan Luck is a monetary analysis advisor in Banking Research within the Federal Reserve Financial institution of New York’s Analysis and Statistics Group.   

Sergio Correia is an economist within the Monetary Stability Division on the Board of Governors of the Federal Reserve System.

How one can cite this submit:
Stephan Luck and Sergio Correia, “Insights from Newly Digitized Banking Information, 1867-1904,” Federal Reserve Financial institution of New York Liberty Avenue Economics, March 6, 2023, https://libertystreeteconomics.newyorkfed.org/2023/03/insights-from-newly-digitized-banking-data-1867-1904/.