DEFINITION of 'Wildcat Banking'

The banking industry in parts of the United States from 1837 to 1865, when banks were established in remote and inaccessible locations. During this period, banks were chartered by state law without any federal oversight. Less stringent regulations on the banking industry at the time led to this period also being referred to as the "free banking" era.

BREAKING DOWN 'Wildcat Banking'

The term "wildcat banking" supposedly had its genesis in 1830s banking in Michigan, where bankers were believed to have set up banks in areas so remote that wildcats roamed there. These bank locations were sometimes the only places where the bank's notes could be redeemed, thereby creating a formidable obstacle for their redemption by note holders and providing an unfair advantage to unscrupulous bankers.

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