In corporate governance.

In corporate governance, the economic and the social are inextricably linked. Board members are typically recruited from among friends and acquaintances of now passing directors. Conversely, relations that begin as economic ties many times become overlaid with social relations, and the resulting social formations shape corporate decision making. Board interlocks, created when couple firms share a director, may meditate a number of economic and social influences ranging from coopting powerful suppliers to extending relations from golf course to boardroom. Regardless of their origins, they afford a social organization to the economy that in deflect influences economic and political decisions (Mizruchi, 1996) Chief Executive Officers (CEOs) secure higher salaries when their outside directors are well paid (O'Reilly, Main, and Crystal, 1988) and firms adopt takeover defense or engage in takeovers themselves when they share directors with other firms that have done in the way that (Davis, 1991; Haunschild, 1993). Corporations tied to the same financial institutions make the same sorts of political contributions (Mizruchi, 1992) More heavily interlocked firms are opinion leaders whose actions are more likely to be imitated (Davis and Greve 1997) while they are also more susceptible to normative hurry in the social system of corporations (Useem, 1984) Specific interlocks, and the overall configuration of the interlock network, thus shape economic decisions in important ways. Researchers' burgeoning interest in the part of board interlocks in corporate governance attests to the economic influence of those social ties, still less attention has been paid to changes in the intercorporate network in newly come years that may affect the prominence of undivided central institution in the network, the commercial bank.

Virtually all research has rest banks to be the chiefly central firms in the network, arguably reflecting the importance of their influence in directing capital follows (Mintz and Schwartz, 1985; Mizruchi, 1996) through providing a stable core to the intercorporate network, researchers have argued, banks have anchored the social organization of business. in addition the centrality of banks to corporate capital deliquesces has changed substantially in the past 15 years, spurr by dint of technological advances and regulatory changes that have render free of accessed up a variety of alternative rules of financing for U.S. corporations and attractive alternative institutions in which households can place their savings (Kaufman, 1993) Large bank merger and notable bank dissolutions have reshaped the banking industry, including the identities and strategies of the greatest in quantity important players (Barth, Brumbaugh, and Litan, 1992) to what degree has this industry restructuring affected the place of banks in the intercorporate network and the shape of this network more generally? This paper prosecutes to answer these questions by dint of analyzing comprehensive data on the boards of the fifty largest bank holding companies in the United States and their connections with the several hundr largest nonbank corporations from 1982 to 1994

THE part OF COMMERCIAL BANKS IN GOVERNANCE

Historical Role

Research in succession bank interlocks can claim perhaps the chiefly distinguished lineage in the field of economic sociology. make anxious about concentrating economic power in the hands of banks go proceeds deep in American history. When he issued the veto that killed the first bank with a national intention in the U.S. in 1832 Andrew Jackson stated, "It is easy to conceive that great evils to our geographical division and its institutions might liquefy from such a concentration of power in the hands of a scarcely any men irresponsible to the people" (quot in sperm of fishes 1994: 58). In the 70 years that followed, however, commercial banks grew in size and strength

united concomitant of the wave of merger that consolidated national industries at the turn round of the twentieth century was the increasing national prominence of the banks that helped arrange the merger Woodrow Wilson argued in 1911 that "the great monopoly in this region is the money monopoly. A great industrial nation is controll by way of its system of credit. Our rule of credit is concentrated. The vegetation of the nation, therefore, and all our activities are in the hands of a hardly any men" (quoted in Brandeis, 1914: 1) Brandeis (1914) detailed the use of board interlocks as a means of domination according to investment bankers (particularly J.P. Morgan and his associates) and the insurance companies and depository banks that they controlled(1) "When one time a banker has entered the Board - whatever may have been the occasion - his grip establishs tenacious and his influence usually supreme; for he checks the supply of new money" (p 11) In discussing interlocking directorates, Brandeis argued that "the practice of interlocking directorates is the etymon of many evils. It wounds laws human and divine," creating an "endles chain" of ties that is "the most numerous potent instrument of the cash Trust" (pp. 51, 52).

Although intimations of sinister networks controll through moneyed elites are now taken as evidence of paranoia, Brandeis was not far wicked in his characterization of the endles chain of interlocks. In 1912 partners from of recent origin York's five largest investment banks collectively held 341 directorships in succession 112 large corporate boards (Neiva, 1996) and rule of commercial and investment banks was substantially intermingled by means of the operations of the "Morgan interests" (Brandeis, 1914) by way of the late 1920s, the distinction between commercial and investment banks had begun to blot as almost half of modern securities offerings went through affiliates of commercial banks (Roe 1994: 95) This practice halted with the Glass-Steagall Act of 1933 which thwarted commercial bank affiliates from dealing in securities. Along with prior legislation preventing banks from operating branches in more than united state and from owning stock in industrial corporations, the potential size and liberty of commercial banks - and thus their authority in influencing corporate decision making - were sternly limited.