Avoiding toxic assets and ensuring bank stability: English commercial bank investments, 1880-1910

New estimates are made of the relative importance of investments within the banks' assets structure, of the significance of bank investments in the market as a whole, of the composition of those investments, and of how those changed in a period that experienced a significant increase in the scale, liquidity and diversity in Britain's organised secondary capital markets. Investment holdings in the total market and amongst insurance companies are used as benchmarks. One main finding is that there was a great deal of variation in the size of bank investments relative to total assets, with no evidence of a 'norm' investments ratio. Another finding is that although there is some evidence of greater diversity over time, conservatism - and especially the continued heavy reliance on public sector securities - is more evident. Overall, there was a commitment to a high liquidity, risk-averse approach to portfolio management which contributed to bank stability and limited the financing of the private sector.