Quarterly Journal of Austrian Economics

Facebook icon
LinkedIn icon
Twitter icon
A
A
Home | Mises Library | Free-Banking and Financial Stability in Peru

Free-Banking and Financial Stability in Peru

  • The Quarterly Journal of Austrian Economics
0 Views

Tags Global Economy

07/30/2014Luis Felipe Zegarra

Volume 16, No. 2 (Summer 2013)

The theory of free banking establishes that free competition in note issue decreases the probability of financial instability and currency depreciation. This article analyzes the Peruvian experience between 1862 and 1878 and shows that, consistent with the theory; free banking did not lead to financial instability. On the contrary, government intervention in the banking sector contributed to the expansion of paper money and to the decline in the ability of banks to face the demand for specie.

Cite This Article

Zegarra, Luis Felipe. "Free-Banking and Financial Stability in Peru." The Quarterly Journal of Austrian Economics 16, No. 2 (Summer 2013): 187–226.

Shield icon interview