Savings Banks and the Industrial Revolution in Prussia Supporting Regional Development with Public Financial Institutions

41 Pages Posted: 19 Dec 2017

See all articles by Sibylle Lehmann-Hasemeyer

Sibylle Lehmann-Hasemeyer

University of Hohenheim - Institute of Economics; Centre for Economic Policy Research (CEPR)

Fabian Wahl

University of Hohenheim - Department of Economics

Date Written: December 2017

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 suggest that state intervention can be successful, particularly at early stages of industrial development when capital requirements are manageable, and access to international capital markets is limited.

Keywords: Industrialisation, Prussia, Public Infrastructure, Regional and Urban Development, Savings Banks

JEL Classification: G21, N23, N74, N93, R11

Suggested Citation

Lehmann-Hasemeyer, Sibylle and Wahl, Fabian, Savings Banks and the Industrial Revolution in Prussia Supporting Regional Development with Public Financial Institutions (December 2017). CEPR Discussion Paper No. DP12500, Available at SSRN: https://ssrn.com/abstract=3089756

Sibylle Lehmann-Hasemeyer (Contact Author)

University of Hohenheim - Institute of Economics ( email )

Schloss-Mittelhof (Ost)
70593 Stuttgart
Germany

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Fabian Wahl

University of Hohenheim - Department of Economics ( email )

Wollgrasweg 49
Stuttgart, 70599
Germany
+49711-45924405 (Phone)

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