Book contents
- Frontmatter
- Contents
- List of figures
- List of tables
- Preface and acknowledgements
- Introduction
- Part I Theoretical conjectures on banking, finance, and politics
- Part II The first expansion (1850–1913)
- 3 The advent of deposit banking
- 4 The internationalization of finance
- 5 The origins of corporate securities markets
- 6 The origins of universal banking
- Part III The second expansion (1960–2000)
- Appendixes
- Bibliography
- Citations index
- Subject index
6 - The origins of universal banking
Published online by Cambridge University Press: 22 September 2009
- Frontmatter
- Contents
- List of figures
- List of tables
- Preface and acknowledgements
- Introduction
- Part I Theoretical conjectures on banking, finance, and politics
- Part II The first expansion (1850–1913)
- 3 The advent of deposit banking
- 4 The internationalization of finance
- 5 The origins of corporate securities markets
- 6 The origins of universal banking
- Part III The second expansion (1960–2000)
- Appendixes
- Bibliography
- Citations index
- Subject index
Summary
The business of banking ought to be simple; if it is hard it is wrong. The only securities which a banker, using money that he may be asked at short notice to repay, ought to touch, are those which are easily saleable and easily intelligible.
Bagehot 1991, p. 119.Commercial banks varied between extreme specialization – as in Britain, where merchant banks, colonial banks, clearing banks, issuing banks, trustee banks, discounters, jobbers, stockbrokers, and savings banks each engaged in distinct financial activities – and universality – as in Germany, where all these activities were indifferently handled by large banks. More generally, a universal banking system is defined as a system in which banks engage in both lending and the underwriting of securities. In contrast, a specialized banking system keeps the two activities under separate roofs. Before 1913, universal banking is commonly held to have existed in Belgium, Germany, Austria, and Italy, whereas specialized banking was mostly encountered in France and the Anglo-Saxon countries.
Gerschenkron argued that universal banking reflected a median intensity in firms' capital needs – higher than in England, but lower than in Russia. From the perspective of the information asymmetry literature, universal banking is the most advanced form of delegated monitoring in conditions of acute information asymmetry.
The present account stresses the effect of capital spatial concentration.
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- Moving MoneyBanking and Finance in the Industrialized World, pp. 104 - 126Publisher: Cambridge University PressPrint publication year: 2003