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Political Economy Origins of Financial Markets in Europe and Asia

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  • Andrianova, Svetlana
  • Demetriades, Panicos
  • Xu, Chenggang

Abstract

Summary We provide historical evidence from London, Amsterdam and Hong Kong which highlights the essential role played by governments in kick-starting financial development. In the cases of London and Amsterdam, the emergence of financial markets was a by-product of the rise of large trading monopolies. These monopolies, partly created to improve public finances, were responsible for major financial innovations and helped to strengthen investors' property rights. In Hong Kong, where the financial development model was bank-based, a large banking monopoly with close links to both the British and Chinese governments, set up to finance international trade, played a similar role.

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Bibliographic Info

Article provided by Elsevier in its journal World Development.

Volume (Year): 39 (2011)
Issue (Month): 5 (May)
Pages: 686-699

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Handle: RePEc:eee:wdevel:v:39:y:2011:i:5:p:686-699

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Web page: http://www.elsevier.com/locate/worlddev

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Keywords: property rights monopoly politics institutions finance;

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References

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  1. Acemoglu, Daron & Johnson, Simon & Robinson, James A, 2003. "The Rise of Europe: Atlantic Trade, Institutional Change and Economic Growth," CEPR Discussion Papers 3712, C.E.P.R. Discussion Papers.
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  9. Acemoglu, Daron & Johnson, Simon & Robinson, James A, 2004. "Institutions as the Fundamental Cause of Long-Run Growth," CEPR Discussion Papers 4458, C.E.P.R. Discussion Papers.
  10. Panicos O Demetriades & Kul B Luintel, 2000. "Financial Restraints in the South Korean Miracle," Discussion Papers in Economics 00/5, Department of Economics, University of Leicester.
  11. Michele Fratianni & Franco Spinelli, 2007. "Did Genoa and Venice Kick a Financial Revolution in the Quattrocento?," Working Papers 112, Oesterreichische Nationalbank (Austrian Central Bank).
  12. David Stasavage, 2002. "Credible Commitment in Early Modern Europe: North and Weingast Revisited," Journal of Law, Economics and Organization, Oxford University Press, vol. 18(1), pages 155-186, April.
  13. Panicos Demetriades & Svetlana Andrianova, . "Finance and Growth: What We Know and What We Need To Know," Discussion Papers in Economics 03/15, Department of Economics, University of Leicester.
  14. Sylla, Richard & Legler, John B. & Wallis, John J., 1987. "Banks and State Public Finance in the New Republic: The United States, 1790–1860," The Journal of Economic History, Cambridge University Press, vol. 47(02), pages 391-403, June.
  15. Gelderblom, Oscar & Jonker, Joost, 2004. "Completing a Financial Revolution: The Finance of the Dutch East India Trade and the Rise of the Amsterdam Capital Market, 1595 1612," The Journal of Economic History, Cambridge University Press, vol. 64(03), pages 641-672, September.
  16. Carlos, Ann M. & Key, Jennifer & Dupree, Jill L., 1998. "Learning and the Creation of Stock-Market Institutions: Evidence from the Royal African and Hudson's Bay Companies, 1670–1700," The Journal of Economic History, Cambridge University Press, vol. 58(02), pages 318-344, June.
  17. Svetlana Andrianova & Panicos Demetriades & Anja Shortland, 2002. "Government Ownership of Banks, Institutions, and Financial Development," Discussion Papers in Economics 02/13, Department of Economics, University of Leicester, revised Aug 2006.
  18. North, Douglass C. & Weingast, Barry R., 1989. "Constitutions and Commitment: The Evolution of Institutions Governing Public Choice in Seventeenth-Century England," The Journal of Economic History, Cambridge University Press, vol. 49(04), pages 803-832, December.
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Cited by:
  1. Zuzana Fungáčová & Jan Hanousek, 2011. "Determinants Of Firm Delisting On The Prague Stock Exchange," Prague Economic Papers, University of Economics, Prague, vol. 2011(4), pages 348-365.
  2. Xu, Cheng-Gang, 2010. "The Institutional Foundations of China’s Reforms and Development," CEPR Discussion Papers 7654, C.E.P.R. Discussion Papers.

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