PhD Study : Credit where credit is due: Understanding the impact of product innovation in British banking

Summary

In the late 1720s, the emergent Royal Bank of Scotland pioneered the use of the cash credit. This banking innovation provided an overdrawing facility, subject to personal guarantees. The recipient could overdraw their account and pay only interest on the amount overdrawn, and also receive interest on a positive balance. This new flexible system, which used personal backing instead of property, provided a novel extension of existing credit facilities and was a forerunner of the overdraft (Gaskin, 1965). For the bank, the cash credit helped to foster trade and use of its notes (Fleming, 1876). However, compared to discounted bills, the cash credit was less profitable and less flexible in emergency situations for banking institutions (Homans, 1874/75). The use of the cash credit was much more common in Scotland than in England – where bankers looked on them unfavourably (Homans, 1874/75). Yet, even in Scotland, the cash credit was eventually eclipsed by the discounted bill by the early nineteenth century. Nevertheless, the cash credit had an enduring impact on bank finance. Overdrafts, which were similar to the cash credit – but no longer relied on personal guarantees, became the dominant source of bank lending in Scotland from the early twentieth century onwards (Gaskin, 1965). Indeed, the significance of the cash credit is underscored by the prominent Scottish philosopher David Hume (1826, p.359), who described their underlying principle as “one of the most ingenious ideas that has been executed in commerce”.

This critical historical period of credit innovation provides a fascinating window to examine how banks (and their associated actors) developed and refined credit products for their clienteles. It raises many interesting research questions such as:

How did banks “learn” from the experience e.g. develop strategies to deal with risk, informational asymmetries and competition?

What impact did credit provision have on business and society?

What explains changes in the financing preferences over time and by location?

How did the prevailing political/economic structure interact with banking service delivery?

The PhD project will examine credit innovation within Britain. We are open to proposals for any time-period (historical or modern), with the only stipulation that the primary focus is on credit innovation within banking. While we have framed the project around the cash credit, we are open to the PhD examining alternative cases of innovation.

Essential criteria

Applicants should hold, or expect to obtain, a First or Upper Second Class Honours Degree in a subject relevant to the proposed area of study.

We may also consider applications from those who hold equivalent qualifications, for example, a Lower Second Class Honours Degree plus a Master’s Degree with Distinction.

In exceptional circumstances, the University may consider a portfolio of evidence from applicants who have appropriate professional experience which is equivalent to the learning outcomes of an Honours degree in lieu of academic qualifications.

• A comprehensive and articulate personal statement
• Research proposal of 2000 words detailing aims, objectives, milestones and methodology of the project

Desirable Criteria

If the University receives a large number of applicants for the project, the following desirable criteria may be applied to shortlist applicants for interview.

• First Class Honours (1st) Degree
• Masters at 70%

Funding and eligibility

The University offers the following levels of support:

Vice Chancellors Research Studentship (VCRS)

The following scholarship options are available to applicants worldwide:

• Full Award: (full-time tuition fees + £19,000 (tbc))
• Part Award: (full-time tuition fees + £9,500)
• Fees Only Award: (full-time tuition fees)

These scholarships will cover full-time PhD tuition fees for three years (subject to satisfactory academic performance) and will provide a £900 per annum research training support grant (RTSG) to help support the PhD researcher.

Applicants who already hold a doctoral degree or who have been registered on a programme of research leading to the award of a doctoral degree on a full-time basis for more than one year (or part-time equivalent) are NOT eligible to apply for an award.

Please note: you will automatically be entered into the competition for the Full Award, unless you state otherwise in your application.

Department for the Economy (DFE)

The scholarship will cover tuition fees at the Home rate and a maintenance allowance of £19,000 (tbc) per annum for three years (subject to satisfactory academic performance).

This scholarship also comes with £900 per annum for three years as a research training support grant (RTSG) allocation to help support the PhD researcher.

• Candidates with pre-settled or settled status under the EU Settlement Scheme, who also satisfy a three year residency requirement in the UK prior to the start of the course for which a Studentship is held MAY receive a Studentship covering fees and maintenance.
• Republic of Ireland (ROI) nationals who satisfy three years’ residency in the UK prior to the start of the course MAY receive a Studentship covering fees and maintenance (ROI nationals don’t need to have pre-settled or settled status under the EU Settlement Scheme to qualify).
• Other non-ROI EU applicants are ‘International’ are not eligible for this source of funding.
• Applicants who already hold a doctoral degree or who have been registered on a programme of research leading to the award of a doctoral degree on a full-time basis for more than one year (or part-time equivalent) are NOT eligible to apply for an award.

Due consideration should be given to financing your studies. Further information on cost of living