Insider Lending

Today the term insider lending conveys an aura of abuse and corruption of unethical if not illegal behavior. In early nineteenth century New England however insider lending was an integral aspect of the banking system. Not only was the practice an accepted fact of economic life but as Naomi R. Lamoreaux argues it enabled banks (at least in this particular historical context) to play an important role in financing economic development. As the banking system evolved over the course of the century however lending practices became more impersonal and professional.