Johannes Bracht

Formal criteria, personal experience and institutional knowledge. The credit business of a small town savings bank in Germany, 1830-1866

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Trust has often been seen as an essential part of network-based credit relationships. In this perspective trust has lost significance, as modern society made increasingly use of formal institutions (e.g. mortgage books). This article analyses the credit relations of the inhabitants of a village and the credit business of a savings bank nearby. Established in 1825, the savings bank was in a competition with an active and largely not network-based credit market. It is shown that the savings bank managers in the first decades generally used the instrument of formal collateral. In the 1850s, however, credits were granted mainly to debtors who had been customers before, and the bank even renounced supplementary collateral. The article thus shows that even a financial institution depended on the individual experience of its staff. The savings bank manager provided individual information relying on his former business as a land register official. Furthermore the accounting books served as a corporate information depot. Thus the transition from a network-based credit culture to an institutional and formal financial sector should be interpreted as fluid.

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