Risk and Information Management in French and German Banks in the 19th and early 20th Centuries. This view rests on the assumption of risk aversion and a certain information-management. The literature tends to emphasize risk aversion, liquidity and security, and information as the primary concerns of bankers when they made lending decisions. It is generally assumed that the banks' ability to assess primary information improved over the nineteenth century and culminated in the practices of the German universal banks. These assumptions are in the literature underpinned by banks' public statements and the writings of contemporary economists.
Banks learn from mistakes.
I compared a significant range of archival material from private and early joint-stock banks with information from universal banks in the early 20th century, and find little support for these propositions. The extreme dates are 1808 to 1915. I made 955 observations concerning risk-spreading, collateral, technical expertise, reserves and liquidity, reputation and signalling. I concluded that the bankers were in general risk-loving. Reputation substituted widely for primary information.