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Small is beautiful: the efficiency of credit markets in the late medieval Holland

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  • Jan Luiten van Zanden
  • Jaco Zuijderduijn
  • Tine De Moor

Abstract

In this paper, we analyse the functioning of private capital markets in Holland in the late medieval period. We argue that in the absence of banks and state agencies involved in the supply of credit, entrepreneurs' access to credit was determined by two interrelated factors. The first was the quality of property rights protection and the extent to which properties could be used as collateral. The second was the level of interest in borrowing money at the time as well as such borrowing compared with the interest rates on risk-free investments. For our case study, the small town of Edam and its hinterland, De Zeevang, in the fifteenth and sixteenth centuries, we demonstrate that properties were used as collateral on a large scale and that interest rates on both small and large loans were relatively low (about 6 percent). As a result, many households (whether headed by men or women) owned financial assets and/or debts, and the degree of financial sophistication was relatively high. Copyright , Oxford University Press.

Suggested Citation

  • Jan Luiten van Zanden & Jaco Zuijderduijn & Tine De Moor, 2012. "Small is beautiful: the efficiency of credit markets in the late medieval Holland," European Review of Economic History, European Historical Economics Society, vol. 16(1), pages 3-22, February.
    • Handle: RePEc:oup:ereveh:v:16:y:2012:i:1:p:3-22
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    File URL: http://hdl.handle.net/10.1093/ereh/her007
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    Cited by:

    1. Arvind Ashta & Isabelle Demay & Mawuli Couchoro, 2016. "The Role of Stakeholders in the Historical Evolution of Microfinance in Togo," Economic History of Developing Regions, Taylor & Francis Journals, vol. 31(2-3), pages 303-344, September.
    2. Jan Luiten van Zanden, 2012. "In Good Company: About Agency and Economic Development in Global Perspective," Economic History of Developing Regions, Taylor & Francis Journals, vol. 27(S1), pages 16-27.
    3. Jan Luiten van Zanden & Emanuele Felice, 2017. "Benchmarking the Middle Ages. XV century Tuscany in European Perspective," Working Papers 0081, Utrecht University, Centre for Global Economic History.
    4. Marcella Lorenzini, 2015. "Notarial Credit in Eighteenth-Century Trentino: Dynamics and Trends," DEM Working Papers 2015/01, Department of Economics and Management.
    5. Zuijderduijn, Jaco, 2016. "The Ages of Women and Men : Life Cycles, Family and Investment in the Fifteenth-Century Low Countries," Lund Papers in Economic History 150, Lund University, Department of Economic History.
    6. De Vijlder, Nicolas, 2012. "A macroeconomic analysis of the land market in the count of Flanders and the duchy of Brabant. (fifteenth and sixteenth century)," MPRA Paper 39283, University Library of Munich, Germany.
    7. Timur Kuran & Jared Rubin, 2014. "The Financial Power of the Powerless: Socio-Economic Status and Interest Rates under Partial Rule of Law," Working Papers 14-22, Chapman University, Economic Science Institute.

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