Portfolio Management and Profitability in Early-Nineteenth-Century Banking

Notwithstanding the importance of maintaining soundness, commercial banks in early ante-bellum America still strove to maximize profits, according to Professor Adams, who cites Stephen Girard's conservative private bank as an example. Using internal data from Girard's bank, of the kind tha...

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Bibliographic Details
Published in:Business history review 1978, Vol.52 (1), p.61-79
Main Author: Adams, Donald R.
Format: Article
Language:English
Subjects:
Bank accounts
Bank assets
Bank capital
Bank earnings
Bank liquidity
Bank loans
Bank portfolios
Bank stocks
Discount loans
Financial investments
Portfolio management
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Summary:Notwithstanding the importance of maintaining soundness, commercial banks in early ante-bellum America still strove to maximize profits, according to Professor Adams, who cites Stephen Girard's conservative private bank as an example. Using internal data from Girard's bank, of the kind that is seldom available for banks, he shows that a flexible policy of shifting from government and quasi-government securities, as they became scarcer, to business debt, both long- and short-term, kept bank profits from declining. So long as Girard lived, his bank remained fully competitive with the growing number of chartered institutions.
ISSN:0007-6805
2044-768X
DOI:10.2307/3113228