Italian investment and merchant banking up to 1914: Hybridising international models and practices

In the long growth cycle between 1896-1907 some dramatic changes in the Italian financial structure occurred. In 1893-1894 two big German-style mixed banks were created in Milan with the strong support of German, Swiss and French capital. As well known, Alexander Gerschenkron argued that Italian mixed banks played a major role in the national industrialisation during the so-called big spurt of those years. Indeed, as stated by Antonio Confalonieri and Peter Hertner, German-style mixed banks financed new manufacturing sectors, but they were relevant, above all, because they were quite innovative in financing industrial firms, by combining both short term credits as commercial banks and long term credits as investment banks. Moreover they acted as merchant banks whenever industrial firms required a connection with financial markets or needed financial or managerial restructuring. The paper focuses on the specific heritage of the XIXth century private banking on Italian major mixed banks’ practices. It considers their international connections (Paris, Berlin, and so on) and their operating models in relation to the European ones. Besides, we will provide a comparative quantitative analysis of their portfolios in order to evaluate how much they differed from the other major European universal banks (and how much investment banking activities weighted in their portfolios)