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Savings banks and the industrial revolution in Prussia: Supporting regional development with public financial institutions

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  • Lehmann-Hasemeyer, Sibylle H.
  • Wahl, Fabian

Abstract

We show that smaller, regional public financial intermediaries significantly contributed to industrial development, using a new data set of the foundation year and location of Prussian savings banks. This extends the banking-growth nexus beyond its traditional focus on the large universal banks, to savings banks. The saving banks had an impact through the financing of public infrastructure, such as railways, and new private factories. Saving banks were public financial intermediaries, so our results strongly suggest that state intervention can be very successful, particularly in regions in the early stages of industrial development when capital requirements are manageable, and access to international capital markets is limited.

Suggested Citation

  • Lehmann-Hasemeyer, Sibylle H. & Wahl, Fabian, 2017. "Savings banks and the industrial revolution in Prussia: Supporting regional development with public financial institutions," Hohenheim Discussion Papers in Business, Economics and Social Sciences 18-2017, University of Hohenheim, Faculty of Business, Economics and Social Sciences.
  • Handle: RePEc:zbw:hohdps:182017
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    Keywords

    Savings Banks; Prussia; Industrialisation; Public Infrastructure; Regional and Urban Development;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • N23 - Economic History - - Financial Markets and Institutions - - - Europe: Pre-1913
    • N74 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - Europe: 1913-
    • N93 - Economic History - - Regional and Urban History - - - Europe: Pre-1913
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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