Universal Banking and the Development of Secondary Corporate Debt Markets: Lessons from 1830s Belgium

40 Pages Posted: 9 Jan 2011

See all articles by Stefano Ugolini

Stefano Ugolini

University of Toulouse 1 - Laboratoire d'Etudes et de Recherches sur l'Économie, les Politiques et les Systèmes Sociaux (LEREPS)

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Date Written: January 5, 2011

Abstract

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.

Keywords: Universal banking, stock markets, intermediation, financial development

JEL Classification: G24, G32, N23, O16

Suggested Citation

Ugolini, Stefano, Universal Banking and the Development of Secondary Corporate Debt Markets: Lessons from 1830s Belgium (January 5, 2011). Norges Bank Working Paper 2010/21 , Available at SSRN: https://ssrn.com/abstract=1735390 or http://dx.doi.org/10.2139/ssrn.1735390

Stefano Ugolini (Contact Author)

University of Toulouse 1 - Laboratoire d'Etudes et de Recherches sur l'Économie, les Politiques et les Systèmes Sociaux (LEREPS) ( email )

21, Allée de Brienne
Toulouse, 31042
France

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