Established in 1865, the Freedman’s Savings and Trust Company, or Freedman’s Bank, gave tens of thousands of former slaves access to financial services for the first time. It helped them save for big purchases and accumulate financial buffers to help soften the blow of income shocks. But it strayed from its initial mission as a depository institution, and when it failed in the 1870s, it was catastrophic for those families and communities who had put their faith in it. Chicago Booth’s Constantine Yannelis finds evidence that the bank’s failure may have created a mistrust of financial institutions that still has not completely dissipated.

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