DP1171 Universal Banks and German Industrialization: A Reappraisal

Author(s): Jeremy Edwards, Sheilagh C. Ogilvie
Publication Date: May 1995
Keyword(s): Economic Growth, Germany, Investment Finance, Universal Banking
JEL(s): G21, G32, N23
Programme Areas: Financial Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=1171

This paper argues that the role of universal banks in German industrialization has been over-emphasized. The contribution of universal banks to the financing of railway investment was overshadowed by that of the German states. The distinctive features of the relationship between universal banks and industrial firms apply only to industrial joint-stock companies, but the vast majority of the industrial capital stock in Germany before 1914 was accounted for by firms which were not joint-stock companies. Even for industrial joint-stock companies, careful analysis of the realtionship between these companies and universal banks casts serious doubt on the conventional view of this relationship.