# The Coevolution of Banks and Corporate Securities Markets: The Financing of Belgium's Industrial Take-Off in the 1830s

## TL;DR

This paper examines how banks and securities markets in Belgium coevolved during the 1830s, highlighting the mutual influence of financial intermediaries and market conditions in early industrialization.

## Contribution

It provides a detailed case study of the coevolution of banks and securities markets, emphasizing the roles of securitization and market-making in Belgium's early financial system.

## Key findings

- Banks acted as securitizers of securities.
- Banks also served as market-makers for issued securities.
- Structural and cyclical factors influenced financial architecture changes.

## Abstract

Recent developments in the literature on financial architecture suggest that banks and markets not only coexist, but also coevolve in ways that are non-neutral from the viewpoint of optimality. This article aims to analyse the concrete mechanisms of this coevolution by focusing on a very relevant case study: Belgium (the first Continental country to industrialize) at the time of the very first emergence of a modern financial system (the 1830s). The article shows that intermediaries played a crucial role in developing secondary securities markets (as banks acted as securitizers), but market conditions also had a strong feedback on banks' balance sheets and activities (as banks also acted as market-makers for the securities they had issued). The findings suggest that not only structural, but also cyclical factors can be important determinants of changes in financial architecture.

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Source: https://tomesphere.com/paper/1906.11023