Methodological Approaches to the Study of British Banking History. A Select Illustration from Bank-Firm Relationships

The article discusses different approaches to the study of British banking history. There is a brief consideration of the case study approach which has traditionally been prominent; the studies of the Midland Bank, by Homes and Green, and of Barclays Bank, by Ackrill and Hannah, illustrate some of the strengths and weaknesses associated with this form of historical methodology. However, the authors argue that the study of banking history can benefit from the more explicit use of theoretical concepts and empirical methodology developed in Economics, Finance and Management Sciences. Baker and Collins draw on their own work on the provision of corporate finance by the British commercial banks before 1914 to demonstrate the application of concepts from principal-agent theory to help explain bank behaviour within an imperfect market. They discuss data and methods of analysis used to establish the nature and effectiveness of bank lending to industrial clients, and offer an explanation for that behaviour based on concepts of transaction banking.