The Rise and Fall of the German Stock Market, 1870-1938

The prior literature has advanced differing views on whether Germany during the late 19th and early 20th centuries was an economy supported by an equity-based as well as a bank-oriented financial system. Primarily by deploying a new IPO dataset for the Berlin Stock Exchange encompassing 1870 to 1938, we show German equity markets were well-developed as the 19th century drew to a close and remained so through the 1920s. Our analysis indicates regulation helped to foster development before 1913 but had a deleterious impact during the 1930s and suggests that there was a fruitful coexistence between large banks and markets until the Nazi era.