Constituencies and Legislation: The Fight Over the Mcfadden Act of 1927

43 Pages Posted: 6 Aug 2011 Last revised: 6 Mar 2023

See all articles by Raghuram G. Rajan

Raghuram G. Rajan

University of Chicago - Booth School of Business; International Monetary Fund (IMF); National Bureau of Economic Research (NBER)

Rodney Ramcharan

University of Southern California, Marshall School of Business

Multiple version iconThere are 3 versions of this paper

Date Written: August 2011

Abstract

The McFadden Act of 1927 was one of the most hotly contested pieces of legislation in U.S. banking history, and its influence was felt over half a century later. This paper studies the Congressional voting behavior surrounding the Act’s passage. We find congressmen in districts in which landholdings were concentrated, and credit costlier were significantly more likely to oppose the act. The evidence suggests that while the law and the overall regulatory structure can shape the financial system far into the future, they themselves are likely to be shaped by elites, even in countries with benign political institutions.

Suggested Citation

Rajan, Raghuram G. and Ramcharan, Rodney, Constituencies and Legislation: The Fight Over the Mcfadden Act of 1927 (August 2011). NBER Working Paper No. w17266, Available at SSRN: https://ssrn.com/abstract=1905859

Raghuram G. Rajan (Contact Author)

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Rodney Ramcharan

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