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Minimising Risk: Financial Intermediaries and Bond Issuing in London before the Great War

In: Decision Taking, Confidence and Risk Management in Banks from Early Modernity to the 20th Century

Author

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  • Anders L. Mikkelsen

    (King’s College London)

Abstract

In the 1880s, increased competition forced issuing houses to incur a greater degree of underwriting and reputational risk and weakened their ability to act as effective market gatekeepers. This chapter analyses how issuing houses responded to these challenges, the methods adopted and the factors that furthered and retarded their ability to respond effectively. Market conservatism initially impeded an effective response until the Baring Crisis exposed the potential dangers of the new situation. This crisis prompted financial intermediaries to overcome market concerns and resulted in the development of standing international issuing syndicates and underwriting groups. The former enabled issuing houses to regain their position as effective gatekeepers, while underwriting groups effectively subcontracted underwriting risk to other parties and transformed the way underwriting risk was judged.

Suggested Citation

  • Anders L. Mikkelsen, 2017. "Minimising Risk: Financial Intermediaries and Bond Issuing in London before the Great War," Palgrave Studies in the History of Finance, in: Korinna Schönhärl (ed.), Decision Taking, Confidence and Risk Management in Banks from Early Modernity to the 20th Century, pages 105-124, Palgrave Macmillan.
    • Handle: RePEc:pal:psitcp:978-3-319-42076-9_5
    DOI: 10.1007/978-3-319-42076-9_5
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