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The Origins of Financial Development: How the African Slave Trade Continues to Influence Modern Finance

Author

Listed:
  • Ross Levine
  • Chen Lin
  • Wensi Xie

Abstract

We assess how the African slave trade—which had enduring effects on social cohesion—continues to influence financial systems. After showing that the intensity with which people were enslaved and exported from Africa during the 1400 – 1900 period helps account for overall financial development, household access to credit, and firm access to finance, we evaluate three potential mechanisms linking the slave trade to modern finance—information sharing institutions, trust in financial institutions, and the quality of legal institutions. We discover that the slave trade is strongly, negatively related to the information sharing and trust mechanisms but not to the legal mechanism.

Suggested Citation

  • Ross Levine & Chen Lin & Wensi Xie, 2017. "The Origins of Financial Development: How the African Slave Trade Continues to Influence Modern Finance," NBER Working Papers 23800, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:23800
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    References listed on IDEAS

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    Cited by:

    1. Florian LEON, 2018. "The Credit Structure Database," CREA Discussion Paper Series 18-07, Center for Research in Economic Analysis, University of Luxembourg.

    More about this item

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • N27 - Economic History - - Financial Markets and Institutions - - - Africa; Oceania
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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