Abstract
This chapter explores whether the merchant banks took unacceptable risks to retain their market share. Despite growing concerns about the European situation and an increase in commercial failures, it is shown that a number of merchant banks adopted high-risk strategies. Their exposures are demonstrated by examining the available financial data, including balance sheets and bad debts. The official response will also be considered to determine the nature of any support provided by the Bank of England and to assess whether there was moral hazard in the behaviour of the merchant banks.
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O’Sullivan, B. (2018). Road to Crisis. In: From Crisis to Crisis. Palgrave Studies in the History of Finance. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-96698-4_7
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