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Investor behaviour in a nascent capital market: Scottish bank shareholders in the nineteenth century

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Acheson, Graeme (2011) Investor behaviour in a nascent capital market: Scottish bank shareholders in the nineteenth century. Economic History Review, 64 (1). pp. 188-213. [Journal article]

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URL: http://onlinelibrary.wiley.com/doi/10.1111/j.1468-0289.2010.00524.x/abstract

DOI: DOI: 10.1111/j.1468- 0289.2010.00524.x


This article uses the records of nineteenth-century Scottish banks in an attempt to understand investor behaviour in the early British capital market. It presents four main findings, some of which do not conform to the basic assumptions of standard asset pricing theories. First, in an era when efficient portfolio diversification was not possible, the intrinsic risk of an equity security was an important input into investor decision-making. Second, our evidence suggests that businesspeople initially regarded bank stock as a consumption good, as being a stockholder gave them privileged access to bank finance. When bank lending practices changed in the middle of the century, this access-to-credit advantage associated with owning bank stock largely disappeared. Third, investors typically exhibited a bias towards banks that conducted business in the areas where they resided. Fourth, a sizeable proportion of investors were stockholders in more than one bank.

Item Type:Journal article
Faculties and Schools:Ulster Business School
Research Institutes and Groups:Business and Management Research Institute
ID Code:23541
Deposited By:Dr Graeme Acheson
Deposited On:05 Oct 2012 09:44
Last Modified:25 Oct 2012 15:41

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