Universal banking and the development of secondary corporate debt markets: Lessons from 1830s Belgium
- Stefano Ugolini
- Working Paper
This paper proposes a reassessment of the old-age debate on universal banking and growth by putting it on a different plan. Modern financial economics are used to provide new theoretical foundations to Gerschenkron’s (1962) hypothesis: universality is interpreted as a strategy for banks to reach the critical size needed in order to perform successful securitization of corporate debt. A relevant natural experiment in universal banking and industrialization (Belgium in the 1830s) illustrates the argument. The conclusion is that creating a new financial market also implies establishing intermediaries to supply crucial functions such as underwriting, certification, and liquidity provision.
Norges Bank’s working papers present research projects and reports that are generally not in their final form. Other analyses by Norges Bank’s economists are also included in the series. The views and conclusions in these documents are those of the authors.
ISSN 1502-8190 (online)