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- Title
Universal banks and German industrialization: A reappraisal.
- Authors
Edwards, Jeremy; Ogilvie, Sheilagh
- Abstract
The article discusses the role played by universal banks in the German economic development. A universal bank is one which engages in all forms of banking business: all the activities comprising commercial banking and all forms of investment banking. However, the argument that universal banks played a central role in German industrialization is based not just on their universal nature, but also on a distinctive German institutional feature: banks' representation on the supervisory boards of joint-stock companies. The view that Germany exemplifies the "bank-based" system of investment finance, which is superior to alternative systems, in particular the "market-based" Anglo-American system, is commonly encountered not only in historical analysis, but also in current policy debates, especially those concerning former centrally planned economies. German universal banks supplied external finance to companies in two major forms: current account credit, and organization of issues of new securities. A current account relationship between a bank and a firm involved claims arising on both sides, the balance of this account was struck periodically, but either party had the right to close the account and demand payment at any time.
- Subjects
GERMANY; UNIVERSAL banks; ECONOMIC development; INVESTMENT banking; SECURITIES trading; BANKING industry
- Publication
Economic History Review, 1996, Vol 49, Issue 3, p427
- ISSN
0013-0117
- Publication type
Article
- DOI
10.2307/2597758