Skip to main content
×
×
Home

Banking on a Religious Divide: Accounting for the Success of the Netherlands' Raiffeisen Cooperatives in the Crisis of the 1920s

  • Christopher L. Colvin (a1)
Abstract

This article investigates the impact of the socioreligious segregation of Dutch society on the asset allocation choices of rural bankers and the withdrawal behavior of their depositors during the early 1920s. Results suggest that cooperatively-owned Raiffeisen banks for both Catholic and Protestant minority groups could limit their exposure to a debt-deflation crisis, despite operating more precarious balance sheets than banks for majorities. Business histories demonstrate how strict membership criteria and personal guarantors acted as screening and monitoring devices. Banks serving minorities functioned as club goods, managing their exposure to the crisis by exploiting the confessionalized nature of Dutch society.

  • View HTML
    • Send article to Kindle

      To send this article to your Kindle, first ensure no-reply@cambridge.org is added to your Approved Personal Document E-mail List under your Personal Document Settings on the Manage Your Content and Devices page of your Amazon account. Then enter the ‘name’ part of your Kindle email address below. Find out more about sending to your Kindle. Find out more about sending to your Kindle.

      Note you can select to send to either the @free.kindle.com or @kindle.com variations. ‘@free.kindle.com’ emails are free but can only be sent to your device when it is connected to wi-fi. ‘@kindle.com’ emails can be delivered even when you are not connected to wi-fi, but note that service fees apply.

      Find out more about the Kindle Personal Document Service.

      Banking on a Religious Divide: Accounting for the Success of the Netherlands' Raiffeisen Cooperatives in the Crisis of the 1920s
      Available formats
      ×
      Send article to Dropbox

      To send this article to your Dropbox account, please select one or more formats and confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your <service> account. Find out more about sending content to Dropbox.

      Banking on a Religious Divide: Accounting for the Success of the Netherlands' Raiffeisen Cooperatives in the Crisis of the 1920s
      Available formats
      ×
      Send article to Google Drive

      To send this article to your Google Drive account, please select one or more formats and confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your <service> account. Find out more about sending content to Google Drive.

      Banking on a Religious Divide: Accounting for the Success of the Netherlands' Raiffeisen Cooperatives in the Crisis of the 1920s
      Available formats
      ×
Copyright
Footnotes
Hide All

I thank Gerben Bakker, Stefano Battilossi, Sascha Becker, Oscar Gelderblom, Timothy Guinnane, Abe de Jong, Herman de Jong, Joost Jonker, Peter Koudijs, Eoin McLaughlin, Joke Mooij, Larry Neal, Ronald Rommes, Jean-Laurent Rosenthal, Max-Stephan Schulze, Kenneth Snowden, John Turner, and Hans-Joachim Voth for helpful comments and encouragement; seminar, workshop, and conference participants at the London School of Economics, Queen's University Belfast, the Wissenschaftszentrum Berlin für Sozialforschung, the Economic History Association (Evanston), the Association for the Study of Religion, Economics and Culture (Washington DC), and the European Business History Association (Paris) for useful feedback on my arguments; Jan van der Meer for vital assistance in identifying archival material; Laurence Colvin and Philip Fliers for excellent research assistance; and Ann Carlos and three anonymous referees for showing me how to improve my original submission to this Journal. Financial support from the Economic and Social Research Council is also gratefully acknowledged.

Footnotes
References
Hide All
Alston, Lee J., Grove, Wayne A., and Wheelock, David C.. “Why Do Banks Fail? Evidence from the 1920s.” Explorations in Economic History 31, no. 4 (1994): 409–31.
Berger, Allen N., Klapper, Leora F., and Turk-Ariss, Rima. “Bank Competition and Financial Stability.” Journal of Financial Services Research 35, no. 2 (2009): 99118.
Berman, Eli. “Sect, Subsidy, and Sacrifice: An Economist's View of Ultra-Orthodox Jews.” The Quarterly Journal of Economics 105, no. 3 (2000): 905–53.
Bernanke, Ben. “Nonmonetary Effects of the Financial Crisis in the Propagation of the Great Depression.” American Economic Review 73, no. 3 (1983): 257–76.
Bieleman, Jan. Boeren in Nederland: Geschiedenis van de Landbouw 1500–2000. Amsterdam: Boom, 2008.
Binmore, Ken. Natural Justice. Oxford: Oxford University Press, 2005.
Binmore, Ken. “The Origins of Fair Play.” Proceedings of the British Academy 151 (2007): 151–93.
Borst, C.J.A.De Coöperatieve Centrale Christelijke Boerenleenbank Gevestigd te Alkmaar, 1904–1924.” Unpublished Master's Thesis, Hogeschool InHolland, Haarlem, 2004.
Boyd, John H., and De Nicolò, Gianni. “The Theory of Bank Risk Taking and Competition Revisited.” Journal of Finance 60, no. 3 (2005): 1329–43.
Buchanan, James M.An Economic Theory of Clubs.” Economica 32, no. 125 (1965): 114.
Carlson, Mark, and Mitchener, Kris J.. “Branch Banking, Bank Competition, and Financial Stability.” Journal of Money, Credit and Banking 38, no. 5 (2006): 1293–328.
Chen, Daniel L.Club Goods and Group Identity: Evidence from Islamic Resurgence during the Indonesian Financial Crisis.” Journal of Political Economy 118, no. 2 (2010): 300–54.
Colvin, Christopher L., de Jong, Abe, and Fliers, Philip. “Predicting the Past: Understanding the Causes of Bank Distress in the Netherlands in the 1920s.” Explorations in Economic History 55 (2015): 97121.
Colvin, Christopher L., and McLaughlin, Eoin. “Raiffeisenism Abroad: Why did German Cooperative Banking Fail in Ireland but Prosper in the Netherlands?Economic History Review 62, no. 2 (2014): 492516.
Colvin, Christopher L., Henderson, Stuart, and Turner, John D.. “An Economic Conversion? Rural Cooperative Banking in the Netherlands at the Turn of the Twentieth Century.” Paper presented to the Eighth World Congress of Cliometrics, Strasbourg, 2017.
Davison, Lee K., and Ramirez, Carlos D.. “Local Banking Panics of the 1920s: Identification and Determinants.” Journal of Monetary Economics 66 (2014): 164177.
Jong, De, Herman, J. “Between the Devil and the Deep Blue Sea: The Dutch Economy during World War I.” In The Economics of World War I, edited by Broadberry, Stephen N. and Harrison, Mark, 137–68. Cambridge: Cambridge University Press, 2005.
Degryse, Hans, and Ongena, Steven. “Distance, Lending Relationships and Competition.” Journal of Finance 60, no. 1 (2005): 231–66.
De Rooy, Piet. “Zes Studies over Verzuiling.” BMGN - Low Countries Historical Review 110, no. 3 (1995): 380–92.
De Vries, Johan. Geschiedenis van De Nederlandsche Bank: Visserings Tijdvak 1914–1931. Vol. 1, Part 5, Amsterdam: NIBE, 1989.
van den Landbouw, Directie. “Verslag over den Landbouw in Nederland over 1919.” Verslagen en Mededeelingen van de Directie van den Landbouw 3, 1920.
Elster, Jon. “Social Norms and Economic Theory.” Journal of Economic Perspectives 3, no. 4 (1989): 99117.
Freixas, Xavier, and Rochet, Jean-Charles. Microeconomics of Banking, 2nd Edition. Cambridge MA: MIT Press, 2008.
Granovetter, Mark. “Economic Action and Social Structure: The Problem of Embeddedness.” American Journal of Sociology 93, no. 3 (1985): 481510.
Greif, Avner. “Contract Enforceability and Economic Institutions in Early Trade: The Maghribi Traders' Coalition.” American Economic Review 83, no. 3 (1993): 525–48.
Guinnane, Timothy W.Cooperatives as Information Machines: German Rural Credit Cooperatives, 1883–1914.” Journal of Economic History 61, no. 2 (2001): 366–89.
Guinnane, Timothy W.Delegated Monitors, Large and Small: Germany's Banking System, 1800–1914.” Journal of Economic Literature 40, no. 1 (2002): 73124.
Guinnane, Timothy W.A “Friend and Advisor”: External Auditing and Confidence in Germany's Credit Cooperatives, 1889–1914.” Business History Review 77, no. 2 (2003): 235–64.
Guinnane, Timothy W.Trust: A Concept Too Many.” Jahrbuch für Wirtschaftgeschichte 46, no. 1 (2005): 7792.
Hilary, Gilles, and Wai Hui, Kai. “Does Religion Matter in Corporate Decision Making in America?Journal of Financial Economics 93, no. 3 (2009): 455–73.
Hotelling, Harold. “Stability in Competition.” Economic Journal 39, no. 153 (1929): 4157.
Hull, John C. Risk Management and Financial Institutions, 2nd Edition. Boston MA: Pearson Education, 2010.
Iannaccone, Lawrence R.Sacrifice and Stigma: Reducing Free-Riding in Cults, Communes, and Other Collectives.” Journal of Political Economy 100, no. 2 (1992): 271–91.
Independent Commission on Banking. Final Report: Recommendations. London: Independent Commission on Banking, 2011.
Janse, J.C. “80 Jaar Rabobank Rijswijk.” Mimeo, Rijswijk: Rijswijk Historisch Informatiecentrum, 1990.
Jonker, Joost. “Boerenvreugde of Boerenverdriet? De NCB en de Emancipatie van de Brabantse Platteland, 1896–1920.” Tijdschrift voor Sociale Geschiedenis 14, no. 4 (1988a): 387411.
Jonker, Joost. “Welbegrepen Eigenbelang; Ontstaan en Werkwijze van Boerenleenbanken in Noord-Brabant, 1900-1920.” Jaarboek voor de Geschiedenis van Bedrijf en Techniek 5 (1988b): 188206.
Jonker, Joost. “Sinecures or Sinews of Power? Interlocking Directorships and Bank-Industry Relations in the Netherlands, 1910–1940.” Economic and Social History in the Netherlands 3 (1991): 119–32.
Jonker, Joost. “Spoilt for Choice? Banking Concentration and the Structure of the Dutch Banking Market, 1900–1940.” In The Evolution of Financial Institutions and Markets in Twentieth-Century Europe, edited by Cassis, Youssef, Feldman, Gerald D., and Olsson, Ulf, 187208. Aldershot: Scholar Press, 1995.
Jonker, Joost. “Between Private Responsibility and Public Duty. The Origins of Bank Monitoring in the Netherlands, 1860–1930.” Financial History Review 3, no. 3 (1996): 139–52.
Jonker, Joost. “The Alternative Road to Modernity: Banking and Currency, 1814–1914.” In A Financial History of the Netherlands edited by 't Hart, Marjolein, Jonker, Joost, and Luiten van Zanden, Jan, 94123. Cambridge: Cambridge University Press, 1997.
Jonker, Joost, and Luiten van Zanden, Jan. “Method in the Madness? Banking Crises Between the Wars, An International Comparison.” In Banking, Currency, and Finance in Europe Between the Wars edited by Feinstein, Charles H., 7793. Oxford: Clarendon Press, 1995.
Keeley, Michael C.Deposit Insurance, Risk, and Market Power in Banking.” American Economic Review 80, no. 5 (1990): 1183–200.
Khan, Feisal. “How ‘Islamic’ is Islamic Banking?Journal of Economic Behavior and Organization 76, no. 3 (2010): 805–20.
Knight, Frank H. Risk, Uncertainty, and Profit. Boston: Houghton Mifflin, 1921.
Knippenburg, Hans. De Religieuze Kaart van Nederland: Omvang en Geografische Spreiding van de Godsdienstige Gezindten vanaf de Reformatie tot Heden. Assen: Van Gorcum, 1992.
Kohn, Meir. Financial Institutions and Markets, 2nd Edition. New York: Oxford University Press, 2004.
Kruijt, Jakob Pieter. “The Netherlands: The Influence of Denominationalism on Social Life and Organizational Patterns.” In Consociational Democracy: Political Accommodation in Segmented Societies edited by McRae, Kenneth D., 128–36. Toronto: McLelland and Stewart, 1974.
Kumar, Alok, Page, Jeremy K., and Spalt, Oliver G.. “Religious Beliefs, Gambling Attitudes, and Financial Market Outcomes.” Journal of Financial Economics 102, no. 3 (2011): 671708.
Laeven, Luc, and Levine, Ross. “Bank Governance, Regulation and Risk Taking.” Journal of Financial Economics 93, no. 2 (2009): 259–75.
Lijphart, Arend. The Politics of Accommodation: Pluralism and Democracy in the Netherlands, 2nd Edition. Berkeley: University of California Press, 1979.
Lundblad, Christian. “The Risk Return Tradeoff in the Long-Run: 1836–2003.” Journal of Financial Economics 85, no. 1 (2007): 123–50.
Luykx, Paul. “The Netherlands.” In Political Catholicism in Europe, 1918–1965, edited by Buchanan, Tom and Conway, Martin, 219–48. Oxford: Oxford University Press, 1996.
McBride, Michael. “Club Mormon: Free-Riders, Monitoring, and Exclusion in the LDS Church.” Rationality and Society 19, no. 4 (2007): 395424.
Meijering, Edinhard. Het Nederlandse Christendom in de Twintigste Eeuw. Amsterdam: Uitgeverij Balans, 2007.
Minsky, Hyman P. Stabilizing an Unstable Economy. New Haven: Yale University Press, 1986.
Morck, Randall, and Yeung, Bernard. “Economics, History, and Causation.” Business History Review 85, no. 1 (2011): 3963.
Organisation for Economic Cooperation and Development [OECD]. “Review of Competition in the Dutch Retail Banking Sector.” Paper No. DAF/COMP/WP2(2007)4/REV2, 2007.
Ostrom, Elinor. “Toward a Behavioural Theory Linking Trust, Reciprocity, and Reputation.” In Trust and Reciprocity: Interdisciplinary Lessons from Experimental Research edited by Ostrom, Elinor and Walker, James, 1979. New York: Russell Sage Foundation, 2003.
Petersen, Mitchell A., and Rajan, Raghuram G.. “Does Distance Still Matter? The Information Revolution in Small Business Lending.” Journal of Finance 57, no. 6 (2002): 2533–70.
Rajan, Raghuram G., and Ramcharan, Rodney. “The Anatomy of a Credit Crisis: The Boom and Bust in Farm Land Prices in the United States in the 1920s.” American Economic Review 105, no. 4 (2015): 1439–77.
Rommes, Ronald. Voor en Door Boeren? De Opkomst van het Coöperatiewezen in de Nederlandse Landbouw vóór de Tweede Wereldoorlog. Hilversum: Verloren, 2014.
Saunders, Anthony, Strock, Elizabeth, and Travlos, Nickolaos G.. “Ownership Structure, Deregulation, and Bank Risk Taking.” Journal of Finance 45, no. 2 (1990): 643–54.
Sluyterman, Keetie, Dankers, Joost, van der Linden, Jos, et al. Het Coöperatieve Alternatief: Honderd Jaar Rabobank 1898–1998. The Hague: SDU Uitgevers, 1998.
Smits, Marinus. Boeren met Beleid: Honderd Jaar Katholieke Nederlandse Boeren- en Tuindersbond 1896–1996. Nijmegen: Valkhof Pers, 1996.
Stoffer, J. Het Ontstaan van de NMB. De Geschiedenis van haar Voorgangers in de Jaren 1900 tot 1927. Amsterdam: Kluwer, 1985.
Stuurman, Siep. Verzuiling, Kapitalisme en Patriarchaat: Aspecten van de Ontwikkeling van de Moderne Staat in Nederland. Nijmegen: Socialistiese Uitgeverij Nijmegen, 1983.
Shu, Tao, Sulaeman, Johan, and Eric Yeung, P.. “Local Religious Beliefs and Mutual Fund Risk-Taking Behaviors.” Management Science 58, no. 10 (2012): 1779–96.
Van Eijnatten, Joris, and van Lieburg, Fred. Nederlandse Religiegeschiedenis, 2nd Edition. Hilversum: Verloren, 2002.
Zanden, Van, Luiten, Jan. “Old Rules, New Conditions, 1914–1940.” In A Financial History of the Netherlands, edited by 't Hart, Marjolein, Jonker, Joost, and Luiten van Zanden, Jan, 124–51. Cambridge: Cambridge University Press, 1997.
Zanden, Van, Luiten, Jan, and van Riel, Arthur. The Strictures of Inheritance: The Dutch Economy in the Nineteenth Century. Princeton: Princeton University Press, 2004.
Vercauteren, Frans, Rosendaal, Jan, and Kuijpers, Jan. Boeren Gingen Bankieren: Honderd Jaar Rabobank Midden-Langstraat 1904–2004. Waalwijk: Rabobank Midden-Langstraat, 2004.
Stuart, Verrijn, Marius, Gerard. Bankpolitiek, 2nd Edition. The Hague: Uitgevers-Maatschappij v/h G. Delweg, 1931.
Vijverberg, Aad. “Het Loosduinse Veilingdrama.” Jaarboek Geschiedkundige Vereniging Die Haghe (2009): 162–83.
Weber, Max. “The Protestant Sects and the Spirit of Capitalism.” In The Protestant Ethic and the Spirit of Capitalism. Translated and introduced by Kalberg, Stephen. Oxford: Oxford University Press, 2011 [1904].
Weber, Max. The Protestant Ethic and the Spirit of Capitalism. Translated and introduced by Stephen Kalberg. Oxford: Oxford University Press, 2011 [1920].
Williamson, Oliver E.Calculativeness, Trust, and Economic Organization.” Journal of Law and Economics 36, no. 1 (1993): 453–86.
Recommend this journal

Email your librarian or administrator to recommend adding this journal to your organisation's collection.

The Journal of Economic History
  • ISSN: 0022-0507
  • EISSN: 1471-6372
  • URL: /core/journals/journal-of-economic-history
Please enter your name
Please enter a valid email address
Who would you like to send this to? *
×

Metrics

Altmetric attention score

Full text views

Total number of HTML views: 73
Total number of PDF views: 346 *
Loading metrics...

Abstract views

Total abstract views: 1285 *
Loading metrics...

* Views captured on Cambridge Core between 21st August 2017 - 17th August 2018. This data will be updated every 24 hours.