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Political Instability, Institutions and Private Capital Markets in Lima, Peru

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  • Luis Felipe Zegarra

    (CENTRUM Católica Graduate Business School)

Abstract

This article analyzes the evolution of the private credit market of Lima between 1835 and 1865. In particular, it explores the effects of political instability and institutional change on the allocation of medium-term and long-term credit. By relying on a sample of more than 1,200 notarized records, the article shows that institutions had an important effect on the cost of credit. Political instability and institutional uncertainties led to high interest rates. As Peru became more stable after the mid-1840s and the risk of lending declined, interest rates declined.

Suggested Citation

  • Luis Felipe Zegarra, 2015. "Political Instability, Institutions and Private Capital Markets in Lima, Peru," Working Papers 39, Peruvian Economic Association.
    • Handle: RePEc:apc:wpaper:2015-039
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    References listed on IDEAS

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    1. La Porta, Rafael & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert W. Vishny, 1997. "Legal Determinants of External Finance," Journal of Finance, American Finance Association, vol. 52(3), pages 1131-1150, July.
    2. Levine, Ross, 1998. "The Legal Environment, Banks, and Long-Run Economic Growth," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 30(3), pages 596-613, August.
    3. Beveridge, Andrew A., 1985. "Local Lending Practice: Borrowers in a Small Northeastern Industrial City, 1832–1915," The Journal of Economic History, Cambridge University Press, vol. 45(2), pages 393-403, June.
    4. Haber, Stephen H., 1991. "Industrial Concentration and the Capital Markets: A Comparative Study of Brazil, Mexico, and the United States, 1830–1930," The Journal of Economic History, Cambridge University Press, vol. 51(3), pages 559-580, September.
    5. Eichengreen, Barry, 1984. "Mortgage Interest Rates in the Populist Era," American Economic Review, American Economic Association, vol. 74(5), pages 995-1015, December.
    6. Zegarra, Luis Felipe, 2014. "Women And Credit In Peru During The Guano Era. Was There Gender Discrimination In The Mortgage Credit Market Of Peru?," Revista de Historia Económica / Journal of Iberian and Latin American Economic History, Cambridge University Press, vol. 32(1), pages 151-185, March.
    7. Quinn, Stephen, 2001. "The Glorious Revolution'S Effect On English Private Finance: A Microhistory, 1680–1705," The Journal of Economic History, Cambridge University Press, vol. 61(3), pages 593-615, September.
    8. Roe, Mark J. & Siegel, Jordan I., 2011. "Political instability: Effects on financial development, roots in the severity of economic inequality," Journal of Comparative Economics, Elsevier, vol. 39(3), pages 279-309, September.
    9. Engerman,Stanley L. & Hoffman,Philip T. & Rosenthal,Jean-Laurent & Sokoloff,Kenneth L. (ed.), 2003. "Finance, Intermediaries, and Economic Development," Cambridge Books, Cambridge University Press, number 9780521820547.
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    Cited by:

    1. Luis FELIPE Zegarra, 2016. "Political instability and non-price loan terms in Lima, Peru: evidence from notarized contracts," European Review of Economic History, European Historical Economics Society, vol. 20(4), pages 478-525.

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    More about this item

    Keywords

    Mortgage credit; legislation; institutions; political instability;
    All these keywords.

    JEL classification:

    • N2 - Economic History - - Financial Markets and Institutions
    • N26 - Economic History - - Financial Markets and Institutions - - - Latin America; Caribbean
    • N46 - Economic History - - Government, War, Law, International Relations, and Regulation - - - Latin America; Caribbean
    • K1 - Law and Economics - - Basic Areas of Law

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