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The Samurai Bond: Credit Supply And Economic Growth In Pre-War Japan

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  • SERGI BASCO
  • John P. Tang

Abstract

While credit supply growth is associated with exacerbating financial crises, its impact on general economic activity and long run development are unclear. To identify a causal impact, we use bond payments to samurai in nineteenth century Japan as a quasi-natural experiment and exploit variation between regions. Our proxy for credit supply, samurai population shares, is positively associated with per capita levels of firm establishment and capital investment and average firm capital. Initial samurai population share affects output per capita in the short and long run only in regions with early access to railways, mainly through the tertiary sector. Our interpretation is that increased credit supply may have a positive and persistent impact on output if a region has productivity-enhancing investment opportunities.

Suggested Citation

  • SERGI BASCO & John P. Tang, 2017. "The Samurai Bond: Credit Supply And Economic Growth In Pre-War Japan," CEH Discussion Papers 05, Centre for Economic History, Research School of Economics, Australian National University.
    • Handle: RePEc:auu:hpaper:056
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    File URL: https://cbe.anu.edu.au/researchpapers/CEH/WP201705.pdf
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    More about this item

    Keywords

    credit supply; finance-led growth; market access; railways;
    All these keywords.

    JEL classification:

    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • N15 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Asia including Middle East
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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