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The telegraph and modern banking development, 1881–1936

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  • Lin, Chen
  • Ma, Chicheng
  • Sun, Yuchen
  • Xu, Yuchen

Abstract

The telegraph was introduced to China in the late 19th century, a time when China also saw the rise of modern banks. Based on this historical context, this paper documents the importance of information technology in banking development. We construct a data set on the distributions of telegraph stations and banks across 287 prefectures between 1881 and 1936. The results show that the telegraph significantly expanded banks’ branch networks in terms of both number and geographic scope. The effect of the telegraph remains robust when we instrument it using proximity to the early military telegraph trunk.

Suggested Citation

  • Lin, Chen & Ma, Chicheng & Sun, Yuchen & Xu, Yuchen, 2021. "The telegraph and modern banking development, 1881–1936," Journal of Financial Economics, Elsevier, vol. 141(2), pages 730-749.
    • Handle: RePEc:eee:jfinec:v:141:y:2021:i:2:p:730-749
    DOI: 10.1016/j.jfineco.2021.04.011
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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • N75 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - Asia including Middle East

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