IDEAS home Printed from https://ideas.repec.org/a/bpj/aelcon/v3y2013i3p19n7.html
   My bibliography  Save this article

What Financiers Usually Do, and What We Can Learn from History

Author

Listed:
  • Hautcoeur Pierre-Cyrille

    () (EHESS and Paris School of Economics)

  • Riva Angelo E.

    () (European Business School – Paris and Paris School of Economics)

Abstract

This paper aims at presenting an historical perspective on some of the major questions raised by Hyman Minsky and his recent followers, in particular about the instability of banking practices and the diffusion of the “originate and distribute” model under the domination of securities markets. We will argue that, when dealing with these issues, one must take great care at distinguishing what is actually new and what is recurrent. Financial innovation is nothing new. Risk taking through financial innovation is not new either. Banks have been innovating constantly over the last centuries, and many of their practices that we consider as “traditional” have not always been so, and result from a long process involving trials and errors, each error usually resulting in excessive risk-taking and waves of failures. We point out that markets have survived these crises when they have been able to organize and build the institutional structure allowing the various interests involved to become consistent with each other.

Suggested Citation

  • Hautcoeur Pierre-Cyrille & Riva Angelo E., 2013. "What Financiers Usually Do, and What We Can Learn from History," Accounting, Economics, and Law: A Convivium, De Gruyter, vol. 3(3), pages 1-19, April.
  • Handle: RePEc:bpj:aelcon:v:3:y:2013:i:3:p:19:n:7
    as

    Download full text from publisher

    File URL: https://www.degruyter.com/view/j/ael.2013.3.issue-3/ael-2013-0034/ael-2013-0034.xml?format=INT
    Download Restriction: Download restriction for institutions: For access to full text, subscription to the journal is required. Individual readers who register with De Gruyter Online get free access.

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Peter Temin & Hans-Joachim Voth, 2004. "Riding the South Sea Bubble," American Economic Review, American Economic Association, vol. 94(5), pages 1654-1668, December.
    2. Marc Flandreau & Juan H. Flores & Norbert Gaillard & Sebastián Nieto-Parra, 2010. "The End of Gatekeeping: Underwriters and the Quality of Sovereign Bond Markets, 1815-2007," NBER Chapters, in: NBER International Seminar on Macroeconomics 2009, pages 53-92, National Bureau of Economic Research, Inc.
    3. Streeck, Wolfgang, 2009. "Institutions in history: Bringing capitalism back in," MPIfG Discussion Paper 09/8, Max Planck Institute for the Study of Societies.
    4. Pierre-Cyrille Hautcoeur & Angelo Riva, 2012. "The Paris financial market in the nineteenth century: complementarities and competition in microstructures," Economic History Review, Economic History Society, vol. 65(4), pages 1326-1353, November.
    5. Parent, Antoine & Rault, Christophe, 2004. "The Influences Affecting French Assets Abroad Prior to 1914," The Journal of Economic History, Cambridge University Press, vol. 64(2), pages 328-362, June.
    6. Riva, Angelo & White, Eugene N., 2011. "Danger on the exchange: How counterparty risk was managed on the Paris exchange in the nineteenth century," Explorations in Economic History, Elsevier, vol. 48(4), pages 478-493.
    7. François R. Velde, 2007. "John Law's System," American Economic Review, American Economic Association, vol. 97(2), pages 276-279, May.
    8. Stefano Ugolini, 2010. "Universal Banking and the Development of Secondary Corporate Debt Markets: Lessons from 1830s Belgium," Working Paper 2010/21, Norges Bank.
    9. Carmen M. Reinhart & Kenneth S. Rogoff, 2009. "Varieties of Crises and Their Dates," Introductory Chapters, in: This Time Is Different: Eight Centuries of Financial Folly, Princeton University Press.
    10. repec:dau:papers:123456789/5052 is not listed on IDEAS
    11. Rockoff, Hugh T., 1975. "Varieties of Banking and Regional Economic Development in the United States, 1840–1860," The Journal of Economic History, Cambridge University Press, vol. 35(1), pages 160-181, March.
    12. Rene M. Stulz, 2010. "Credit Default Swaps and the Credit Crisis," Journal of Economic Perspectives, American Economic Association, vol. 24(1), pages 73-92, Winter.
    13. Galassi, Francesco L. & Newton, Lucy A., 2001. "My Word Is My Bond: Reputation As Collateral In Nineteenth Century English Provincial Banking," Economic Research Papers 269369, University of Warwick - Department of Economics.
    14. Campbell, Gareth, 2013. "Deriving the railway mania," Financial History Review, Cambridge University Press, vol. 20(1), pages 1-27, April.
    15. 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(4), pages 803-832, December.
    16. Schenk, Catherine R., 1998. "The Origins of the Eurodollar Market in London: 1955-1963," Explorations in Economic History, Elsevier, vol. 35(2), pages 221-238, April.
    17. Anna J. Schwartz, 1984. "Introduction to "A Retrospective on the Classical Gold Standard, 1821-1931"," NBER Chapters, in: A Retrospective on the Classical Gold Standard, 1821-1931, pages 1-22, National Bureau of Economic Research, Inc.
    18. Pierre-Cyrille Hautcoeur & Pascal Lagneau-Ymonet & Angelo Riva, 2010. "L’information boursière comme bien public. Enjeux et perspectives de la révision de la directive européenne « Marchés d’instruments financiers »," Revue d'Économie Financière, Programme National Persée, vol. 98(3), pages 297-315.
    19. Verdier, Daniel, 2001. "Capital Mobility and the Origins of Stock Markets," International Organization, Cambridge University Press, vol. 55(2), pages 327-356, April.
    20. R. C. Michie, 1985. "The London Stock Exchange and the British Securities Market 1850–1914," Economic History Review, Economic History Society, vol. 38(1), pages 61-82, February.
    21. Munro, John H., 2002. "The medieval origins of the 'Financial Revolution': usury, rentes, and negotiablity," MPRA Paper 10925, University Library of Munich, Germany, revised Sep 2002.
    22. Lester, V. Markham, 1995. "Victorian Insolvency: Bankruptcy, Imprisonment for Debt, and Company Winding-up in Nineteenth-Century England," OUP Catalogue, Oxford University Press, number 9780198205180.
    23. Stulz, Rene, 2010. "Credit default Swaps and the Credit Crisis," Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 6, pages 157-175.
    24. Pierre-Cyrille Hautcoeur, 2009. "Financial markets," Post-Print halshs-00754783, HAL.
    25. Michie, Ranald, 2008. "The Global Securities Market: A History," OUP Catalogue, Oxford University Press, number 9780199280629.
    26. Sofia Brito Ramos, 2006. "Why Do Stock Exchanges Demutualize and Go Public?," Swiss Finance Institute Research Paper Series 06-10, Swiss Finance Institute.
    27. Michael D. Bordo & Anna J. Schwartz, 1984. "A Retrospective on the Classical Gold Standard, 1821-1931," NBER Books, National Bureau of Economic Research, Inc, number bord84-1, Diciembre.
    28. Michie, R. C., 1998. "The invisible stabiliser: asset arbitrage and the international monetary system since 17001," Financial History Review, Cambridge University Press, vol. 5(1), pages 5-26, April.
    29. Franklin Allen & Douglas Gale, 2001. "Comparative Financial Systems: A Survey," Center for Financial Institutions Working Papers 01-15, Wharton School Center for Financial Institutions, University of Pennsylvania.
    30. Mahoney, Paul G, 2001. "The Political Economy of the Securities Act of 1933," The Journal of Legal Studies, University of Chicago Press, vol. 30(1), pages 1-31, January.
    31. repec:dau:papers:123456789/5331 is not listed on IDEAS
    32. Sofia B. Ramos, 2003. "Competition Between Stock Exchanges: A Survey," FAME Research Paper Series rp77, International Center for Financial Asset Management and Engineering.
    33. Franklin Allen & Douglas Gale, 2001. "Comparing Financial Systems," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262511258.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jensen Jason O., 2016. "Comment on The Power of Inaction by Cornelia Woll," Accounting, Economics, and Law: A Convivium, De Gruyter, vol. 6(1), pages 65-78, March.
    2. Fantacci Luca, 2013. "Why Banks Do What They Do. How the Monetary System Affects Banking Activity," Accounting, Economics, and Law: A Convivium, De Gruyter, vol. 3(3), pages 333-356, November.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bpj:aelcon:v:3:y:2013:i:3:p:19:n:7. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Peter Golla). General contact details of provider: https://www.degruyter.com .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.