NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

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

Charles W. Calomiris

NBER Working Paper No. 4408
Issued in July 1993
NBER Program(s):   CF   DAE

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.

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Document Object Identifier (DOI): 10.3386/w4408

Published: 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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