Ebook: Free Banking and Bank Entry in Latin America

This article analyzes the impact of free-banking on the banking sector in Latin America
in the 19th and early 20th centuries. I use data for seven countries to compare the entry of
banks and the growth of bank output prior and after the enactment of free-banking laws
to determine whether free-banking (by establishing general requirements for granting
note-issuance rights) lowered barriers to entry. The results show that in most Latin
American countries the adoption of free-banking laws did not cause in the short run an
increase in bank entry and in bank output growth.
JEL Classification: O54, N26, N20, G21
Keywords: Latin America, banking sector, bank laws, bank entry