The trading of unlimited liability bank shares: the Bagehot Hypothesis

Charles Hickson and John Turner ()

Working Papers from Centre for Business Research, University of Cambridge

Abstract: From the mid-1820s, banks became the first business sector in Great Britain and Ireland to be granted the right to form freely on an unlimited liability joint stock basis. Walter Bagehot, the renowned contemporary banking expert, warned that shares in such banks would ultimately be owned by widows, orphans and other impecunious individuals. An alternative hypothesis is that the governing bodies of these banks constrained by special legal restrictions on share trading acted effectively to prevent such shares being transferred to the less wealthy members of society. We test both conjectures using the archives of an Irish joint stock bank. The results do not support Bagehot's hypothesis, but instead indicate that shares continued to be owned by wealthy individuals.

Keywords: unlimited liability; corporate governance; joint stock companies; banking (search for similar items in EconPapers)
JEL-codes: G30 K20 N20 N83 (search for similar items in EconPapers)
Date: 2002-09
Note: PRO-2
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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