The banking functions of the Hungarian urban network in the early 20th century

Abstract

This paper examines the impact of the Hungarian banking system on regional and urban development in the early 20th century, when local banks were important territorial elements of the financial space developing close links to regional economic structures. The basic concept of the study is that there is closer connection not only between the banking sector and the economy as a whole, but between the banking sector and urban development as well. This is coincided with the argument of the American Historical Geographical school (Conzen, 1977) says that the features of the urban network are in strong correlation with the spatial structure of banking system and the diffusion of financial innovations. We considered the spatial breakdown of capital flows are one of the most important indicators of the regional and urban transformation (Gál, 2005). The Hungarian banking system looks back to a history of more than 160 years. Examining the impact of the banking system on regional and urban development is reasonable in the second half of the 19th century, since in Hungary developed an extensive financial system with a well researchable statistical database (Vargha, 1913). The Hungarian banking system was well developed in comparison to international standards by the first decade of the 20th century (Kövér, 1991; Tomka, 1996). Moreover, it became one of the most rapidly growing sectors of the domestic economy of that time ...