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News from London: Greek government bonds on the London Stock Exchange, 1914-1929

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  • Christodoulaki, Olga
  • Penzer, Jeremy

Abstract

Statistical analysis of Greek sovereign debt denominated in gold and traded on the London Stock Exchange from the outbreak of the First World War until the advent of the Great Depression is employed to explore the way that historical events including political and institutional changes shaped investors’ expectations of the capacity of the Greek government to honour its debt obligations. No a priori specification of important dates is made. Military defeat and its aftermath exerted a strong negative impact on the value of Greek sovereign debt. The statistical analysis shows that investors acted upon news of public debt, fiscal performance and money supply. Unforeseen political events also influenced bondholders’ expectations over future payments. By contrast, institutional innovations such as the adoption of the Gold Exchange Standard and the establishment of a central bank de novo did not produce any quantitative market response. Stabilisation and the concomitant institutional reforms however, were factored into the market price of Greek sovereign debt traded in London.

Suggested Citation

  • Christodoulaki, Olga & Penzer, Jeremy, 2004. "News from London: Greek government bonds on the London Stock Exchange, 1914-1929," Economic History Working Papers 22335, London School of Economics and Political Science, Department of Economic History.
  • Handle: RePEc:ehl:wpaper:22335
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    File URL: http://eprints.lse.ac.uk/22335/
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe
    • N0 - Economic History - - General
    • F3 - International Economics - - International Finance
    • G3 - Financial Economics - - Corporate Finance and Governance
    • B1 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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