Abstract/Summary

Crucial in a bank's role as financial intermediary is the ability to extract information from borrowing customers in order to reduce the risks inherent in lending. This paper examines the perceptions of banks' managements and the procedures undertaken by them in such risk assessment in England and Wales at the turn of the twentieth century. The use of 'subjective' information in particular will be considered. It is argued that although social/moral 'virtues' such as reputation and trust were important in the banks' risk assessment, the collection of information concerning a customer's ability to, and likelihood of, repaying credit was paramount. The context in which such decisions took place are also considered, particularly the impact of the financial crisis of 1878 and the amalgamation movement of the late nineteenth century which led to increasing standardisation and centralisation in the banks' evaluation of clients. Despite such changes, the types of information and the language used in banks' assessment of creditworthiness changed little over the period examined.