Corporate-Finance Benefits from Universal Banking: Germany and the United States, 1870-1914

Charles Calomiris

No 4408, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Limitations on bank consolidation and branching in the United States at an early date effectively limited the scope of commercial banks and their involvement in financing large-scale industry, and increased information and transaction costs of issuing securities. In contrast, German industry was financed by large-scale universal banks who maintained long-term relationships with firms, involving ongoing monitoring and disciplining of management, and underwriting. Low costs of German industrial finance are reflected in lower investment banking spreads on securities issues and a higher propensity to issue equity relative to the United States.

JEL-codes: G2 N2 (search for similar items in EconPapers)
Date: 1993-07
Note: CF DAE
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Citations: View citations in EconPapers (11)

Published as Charles W. Calomiris, 1993. "Corporate-finance benefits from universal banking: Germany and the United States, 1870-1917," Proceedings, Federal Reserve Bank of Chicago, issue May, pages 450-464.

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