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

  • Charles W. Calomiris

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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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 4408.

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Date of creation: Jul 1993
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Publication status: published as 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.
Handle: RePEc:nbr:nberwo:4408
Note: CF DAE
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  7. Alden L. Toevs, 1992. "Under what circumstances do bank mergers improve efficiency?," Proceedings 378, Federal Reserve Bank of Chicago.
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  9. Takeo Hoshi & Anil Kashyap & David Scharfstein, 1989. "Bank monitoring and investment: evidence from the changing structure of Japanese corporate banking relations," Finance and Economics Discussion Series 86, Board of Governors of the Federal Reserve System (U.S.).
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