Financial Development and Sectoral Output Growth in 19th Century Germany

2 Description of the data and preliminary analysis

Transportation was the fastest growing among all sectors.

Figure 1: Sectoral Output Growth

Note: The graphs for the sectoral output of mining (M), industry
(IN), agriculture (A), trade (T), transportation (TR), and services
(S) are displayed.

Table 1: Results of the ADF tests

Note: The ADF test is calculated for levels and first differences for the vari-
ables net domestic product, investment, bank lending, total assets, equity
capital, mining, industry, agriculture, trade, transportation and services for
the years 1870 to 1912. The lag length is selected by the Schwarz infor-
mation criterion. *** (**,*) indicates significance at the 99% (95%, 90%)
level.

We also take an alternative measure of the banks’ contribution to financing investment.
Our indicator Total Assets (TA) includes the total assets of savings banks, cooperate credit
associations, mortgage banks, banks of issue and commercial banks.¹⁰ All data are recorded
on an annual basis. The sample period covers the years 1870 to 1912.¹¹

¹⁰See Hoffmann(1965), tables 202, 203, 205, 206, 207, p.733ff.

¹¹Note that some of the data go back to 1850. In our benchmark regressions, we did not take the full time
period, however, to limit our analysis to a period with a uniform federal territory of Germany and to avoid
structural breaks. We also avoid the necessary interpolation of some data points in the 1850s. The main
results of the analysis are unaffected by the choice of the time window.

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