DP1171 | Universal Banks and German Industrialization: A Reappraisal

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This paper argues that the role of universal banks in German industrialization has been over-emphasized. The contribution of universal banks to the financing of railway investment was overshadowed by that of the German states. The distinctive features of the relationship between universal banks and industrial firms apply only to industrial joint-stock companies, but the vast majority of the industrial capital stock in Germany before 1914 was accounted for by firms which were not joint-stock companies. Even for industrial joint-stock companies, careful analysis of the realtionship between these companies and universal banks casts serious doubt on the conventional view of this relationship.