961799 Fohlin The purpose of this project is to provide new evidence on the role of universal banks in Germany during the nineteenth and early twentieth centuries, and, more generally, to shed light on the ability of financial intermediaries to promote economic growth and development in the modern context. Economists and historians have long suggested that financial institutions play a vital role in industrial development, and the German universal banks of the Kaiserreich (1871-1914) are often singled out as the prime example. These banks joined short-term commercial lending with long-term investment banking and are thought to have fostered long-term relationships with the industrial firms they financed. By combining functions and developing close ties with industrialists, German banks are thought to have improved the efficiency and strength of investment and, in turn, to have accelerated industrialization. The hypothesis underlying this study is that many of the characteristics considered integral to the German banking paradigm emerged well after the main spurt of industrial growth and that the corporate finance system taking the German form was neither sufficient nor even necessary for industrialization. By examining the German case in detail, and by drawing international and intertemporal comparisons at each stage, this study promises to yield a wide range of insights into questions of both modern and historical relevance.
