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Capital in British banking, 1920-1970

Author

Listed:
  • Mark Billings
  • Forrest Capie

Abstract

British banks have long attached great importance to capital. Currently they are subject to greater scrutiny and regulation on this issue than ever before. However, it was not until the disclosure of 'hidden reserves' in 1970 that a true picture of British banks' capital emerged. This article uses archival evidence to reveal the capital ratios of several major banks for much of the twentieth century, and demonstrates how these ratios were influenced by official restrictions. Overall the banks maintained much higher levels of capital than implied by their published accounts, although the impact of official restrictions was to force them to operate with lower capital ratios than they desired. But it is argued that capital ratios were neither achieved nor maintained at the expense of reduced or less risky lending.

Suggested Citation

  • Mark Billings & Forrest Capie, 2007. "Capital in British banking, 1920-1970," Business History, Taylor & Francis Journals, vol. 49(2), pages 139-162.
    • Handle: RePEc:taf:bushst:v:49:y:2007:i:2:p:139-162
    DOI: 10.1080/00076790601170231
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    Cited by:

    1. Aikman, David & Haldane, Andrew & Hinterschweiger, Marc & Kapadia, Sujit, 2018. "Rethinking financial stability," Bank of England working papers 712, Bank of England.
    2. Billings, Mark & Capie, Forrest, 2009. "Transparency and financial reporting in mid-20th century British banking," Accounting forum, Elsevier, vol. 33(1), pages 38-53.
    3. Alfred Duncan & Charles Nolan, 2023. "Adam Smith and the Bankers: Retrospect and Prospect," Working Papers 2023_08, Business School - Economics, University of Glasgow.
    4. Forrest Capie, 2018. "The Bank of England Over 325 Years," Economic Affairs, Wiley Blackwell, vol. 38(3), pages 357-366, October.

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