The trading of unlimited liability bank shares: the Bagehot Hypothesis
AbstractFrom 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.
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Bibliographic InfoPaper provided by ESRC Centre for Business Research in its series ESRC Centre for Business Research - Working Papers with number wp241.
Date of creation: Sep 2002
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Web page: http://www.cbr.cam.ac.uk/
unlimited liability; corporate governance; joint stock companies; banking;
Find related papers by JEL classification:
- G30 - Financial Economics - - Corporate Finance and Governance - - - General
- K20 - Law and Economics - - Regulation and Business Law - - - General
- N20 - Economic History - - Financial Markets and Institutions - - - General, International, or Comparative
- N83 - Economic History - - Micro-Business History - - - Europe: Pre-1913
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