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Names, shares and mortgages: the formalisation of Swedish commercial bank lending, 1870–1938

Published online by Cambridge University Press:  15 March 2019

Oskar Broberg  and
Anders Ögren
Oskar Broberg*
Affiliation:
University of Gothenburg
Anders Ögren*
Affiliation:
Lund University
*
O. Broberg, Associate Professor, Department of Economy and Society, University of Gothenburg, PO Box 625, 405 30 Gothenburg, Sweden; email: oskar.broberg@gu.se
A. Ögren, Associate Professor, Department of Economic History, Lund University School of Economics and Management, Box 7080, SE-220 07 Lund, Sweden; email: anders.ogren@ekh.lu.se.
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Abstract

This article explores the process of the formalisation of the Swedish financial market, through an analysis of commercial bank lending in the late nineteenth and early twentieth century. The analysis shows that the incorporation of Swedish business around the turn of the century led to a shift from lending primarily backed by name security to an increased use of mortgage and shares as collateral – after the severe stock market crash in 1920/1 mortgage lending surpassed lending against shares as collateral. We interpret this change as an important part of the formalisation process of the financial system, as it standardised the valuation process and allowed creditors to exit on a secondary market. Our statistical testing points to increased financial wealth and liquidity represented by the broad money supply, plus population growth and urbanisation, as important forces behind this formalisation.

Keywords

bankingcollateralcredit creationfinancial revolutionindustryurbanisation

JEL classification

N14: Europe: 1913– N13: Europe: Pre-1913 N24: Europe: 1913– N23: Europe: Pre-1913
Type
Articles
Information
Financial History Review , Volume 26 , Issue 1 , April 2019 , pp. 81 - 108
Copyright
Copyright © European Association for Banking and Financial History e.V. 2019 

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Footnotes

We gratefully acknowledge research funding from the Jan Wallander and Tom Hedelius Foundation. We are also much indebted to the editors and especially to two anonymous referees; the article has benefitted immensely from their helpful comments and suggestions. All possible errors remain ours.

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