Abstract
This paper attempts to estimate the degree of regional integration of finacial markets in 19th century Germany. German industrialization in the 19th century has often been described as a combination of regional phenomena. In other words, many recent works on the German economic history stressed the "regional character" of the German industrialization, and suggested that any geographical scale, like a "Reich", larger than the states(or leagues of the states) was not necessary for the industrialization of a given region. Yet, according to the standard economic theory, an interregional liquidity of capital is recognized as a sufficient factor for the progression of industrialization, or the economic development. If we find an integration of regional financial markets in 19th century Germany by looking at state-level statistics, then we will have to confirm the(traditional) view that there was a positive relation between market integration and degree of industrialization in Germany. From this point of view, we conducted two kinds of regression analysis. The results seem to allow us to conclude that the regional, divided finacial markets in 19th century Germany experienced a process towards integration. At the same time, they also indicate some regional differences in the market integration process.
