John D. Turner, Queen´s University Belfast

A conservative turn?
British bank lending after the 1878 crisis

with Gareth Campbell (Queen’s University Belfast and Lyndon Moore (Monash University)

British banks are alleged to have taken a conservative turn following the banking crisis of 1878. However, there is no quantitative evidence that banks became more cautious when making loans. Using data on over 35,000 loans from nine banks, we examine whether banks became conservative in their lending protocols after the 1878 crisis. We find that after the crisis banks became more conservative by requiring more and different types of collateral for their loans, reducing their loans to industry and other financial institutions, being more likely to refuse large loans, and becoming less likely to lend to new clients.