Access

You are not currently logged in.

Access your personal account or get JSTOR access through your library or other institution:

login

Log in to your personal account or through your institution.

Is the Glass-Steagall Act Justified? A Study of the U.S. Experience with Universal Banking Before 1933

Randall S. Kroszner and Raghuram G. Rajan
The American Economic Review
Vol. 84, No. 4 (Sep., 1994), pp. 810-832
Stable URL: http://www.jstor.org/stable/2118032
Page Count: 23
  • Download ($10.00)
  • Subscribe ($19.50)
  • Cite this Item
Is the Glass-Steagall Act Justified? A Study of the U.S. Experience with Universal Banking Before 1933
Preview not available

Abstract

The Glass-Steagall Act of 1933 removed commercial banks from the securities underwriting business. We evaluate the argument for the separation of commercial and investment banking, that conflicts of interest induce commercial banks to fool the public into investing in securities which turn out to be of low quality. A comparison of the performance of securities underwritten by commercial and investment banks prior to the Act shows no evidence of this. Instead, the public appears to have rationally accounted for the possibility of conflicts of interest, and this appears to have constrained the banks to underwrite high-quality securities.

Page Thumbnails

  • Thumbnail: Page 
810
    810
  • Thumbnail: Page 
811
    811
  • Thumbnail: Page 
812
    812
  • Thumbnail: Page 
813
    813
  • Thumbnail: Page 
814
    814
  • Thumbnail: Page 
815
    815
  • Thumbnail: Page 
816
    816
  • Thumbnail: Page 
817
    817
  • Thumbnail: Page 
818
    818
  • Thumbnail: Page 
819
    819
  • Thumbnail: Page 
820
    820
  • Thumbnail: Page 
821
    821
  • Thumbnail: Page 
822
    822
  • Thumbnail: Page 
823
    823
  • Thumbnail: Page 
824
    824
  • Thumbnail: Page 
825
    825
  • Thumbnail: Page 
826
    826
  • Thumbnail: Page 
827
    827
  • Thumbnail: Page 
828
    828
  • Thumbnail: Page 
829
    829
  • Thumbnail: Page 
830
    830
  • Thumbnail: Page 
831
    831
  • Thumbnail: Page 
832
    832