Exploring modern bank penetration: Evidence from early twentieth‐century Netherlands

Abstract

We analyse the estate composition of the richest 30 per cent of people who died in the Netherlands in 1921 to find that households used a broad range of institutions to meet their financial demands. Goods and services were either paid in cash or settled periodically with suppliers. Despite the strong growth of commercial banking in the previous decades, households still made extensive use of peer-topeer loans, with or without the added security of notarial contracts. Banks only possessed a competitive edge in savings accounts for small surpluses and current accounts, the latter used most frequently by business owners born after 1870. Distance to the nearest bank office did not matter for these people, but wealthy urbanites were more inclined to use banks than their counterparts in the countryside.

Household Wealth and its Distribution in the Netherlands, 1854-2019

“…Dutch statistical agencies published inheritance tax returns records in an aggregate form since the mid-1850s, reporting wealth information that refers to the decedent population using market prices (Gelderblom, Jonker, Peeters, and de Vicq 2022). The exact level of detail in the wealth reports depends on the period (see below).…”

“…Other researchers have used social class mortality multipliers based on occupational classes (Alvaredo, Atkinson, and Morelli (2018) and Atkinson and Harrison (1978)), or use more sophisticated wealth mortality gradient using the relationship between mortality and housing wealth distribution (Acciari, Alvaredo, and Morelli 2021). In our approach we use mortality rates estimated based on the detailed individual level data from the Tafel V-bis annual ledger for 1921 (discussed further in the appendix), which has been made available by Gelderblom, Jonker, Peeters, and de Vicq (2022). This ledger contains all individuals that died in 1921, that had a wealth above the tax threshold, and also includes their demographic profile (age and gender),…”

“…We did the same to fill in the gaps between 1900 and 1908, but in this case, we relied on the data for the 5 largest banks as published in the Statistical Publication by the Dutch Central Bank. We then crossreferenced this estimation of all deposits held by commercial banks by comparing it to a newly collected dataset of approximately 140 individual commercial banks ( De Vicq and Peeters 2022). This results in a series for aggregate deposits from 1880 until 1938.…”

“…The net worth of those estates -along with the all other deceased individuals with net worth lower than the threshold -were listed alphabetically in Tafel V-bis, which functioned as an annual ledger for the more detailed "Memorie van Successie". To ensure a high tax morale the authorities maintained "[p]enalties for fraud and evasion were about twice the due tax plus any costs" (Gelderblom, Jonker, Peeters, and de Vicq (2022)). Several crosschecks where in the disposal of the tax inspectors.…”

“…The actual value of the estate's land, deposits, and other investments where relatively easy to be verified. In contrast, various types of debt where significantly more difficult to validate (Gelderblom, Jonker, Peeters, and de Vicq (2022)). ,500; 2,000; 3,000; 5,000; 7,500; 10,000; 15,000; 20,000; 25,000; 30,000; 40,000; 50,000; 75,000; 100,000; 150,000; 200,000; 300,000; 500,000; >500,000 1900-1955 8 100; 1,000; 2,000; 5,000; 10,000; 25,000; 50,000; 200,000; >200,000 1956-1984 10 (12) (<0; 0;) 100; 1,000; 2,000; 5,000; 10,000; 25,000; 50,000; 100,000; 200,000; 500,000; >500,000…”