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on Business, Economic and Financial History |
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Issue of 2013‒02‒03
twenty papers chosen by |
| By: | Christopher L. Colvin (Queen’s University Management School, Queen’s University Belfast); Abe de Jong (Rotterdam School of Management, Erasmus University); Philip T. Fliers (Rotterdam School of Management, Erasmus University) |
| Abstract: | Why do some banks fail in financial crises while others survive? This paper answers this question by analysing the consequences of the Dutch financial crisis of the 1920s for 143 banks, of which 37 failed. Banks’ choices in balance sheet composition, corporate governance practices and shareholder liability regimes were found to have a significant impact on their chances of experiencing distress. Banks bore a higher probability of failing if, on the eve of the crisis, they: were highly performing; were highly leveraged; had fewer interlocking directorates with non-banks; and concentrated their managerial interlocks with highly profitable banks. Banks which chose to adopt shareholder liability regimes with unpaid capital were more likely to experience distress, but could mitigate this risk by keeping higher portions of their equity unpaid. Receiver operating characteristic analysis shows that interlock characteristics in particular have a high predictive power. |
| Keywords: | financial crises; bank failures; interlocking directorates; shareholder liability; the Netherlands; the interwar period |
| JEL: | G21 G33 G34 N24 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:hes:wpaper:0035&r=his |
| By: | Kevin O'Rourke |
| Abstract: | This chapter provides a brief introduction to the history of Britain’s engagement with the international economy between 1870 and 2010. It begins by discussing long run trends in the integration of the British economy with the rest of the world over time. Economic historians are typically interested in four types of flows between economies: trade in goods and services; flows of capital; migration flows; and flows of ideas and technology. The last flow is probably the most important one for countries hoping to catch up to the international technological frontier. While this was not the right way to characterise the British economy in 1870, it probably was at various points after World War II. Unfortunately, such flows are also the most difficult to quantify, and so I follow the bulk of the literature in concentrating on trade, capital flows and migration. |
| Date: | 2012–10–03 |
| URL: | http://d.repec.org/n?u=RePEc:oxf:wpaper:number-106&r=his |
| By: | Heidi Deneweth; Oscar Gelderblom; Joost Jonker |
| Abstract: | Building on recent work by Collins et al. this paper aims to explain the failure of corporate and public initiatives to alleviate poverty before the twentieth century by unravelling the financial rationale behind the various combinations of private efforts, family and neighbourhood help, financial intermediation, and government intervention tried by poor households in the eighteenth and nineteenth century. There existed several financial institutions whose functioning was very similar to modern microfinance institutions, yet none of them were in a position to help the poor. We find that in the Netherlands the boundary of formal financial markets moved down not because of financial innovation, but because of economic growth pushing up wages. Until the last quarter of the 19th-century poor households simply lacked the money to use newly established mutual insurances, savings- and loan banks. |
| Keywords: | microfinance, poverty, cash flow management, 19th century, Netherlands |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:ucg:wpaper:0039&r=his |
| By: | Massimiliano Gaetano Onorato (IMT Lucca Institute for Advanced Studies); Kenneth Scheve (Stanford University); David Stasavage (New York University) |
| Abstract: | We provide the first systematic examination of the determinants of military mobilization over the very long run. Focusing on a sample of thirteen great powers between 1600 and 2000 we argue that changes in transport and communications technology were the single most important factor in both ushering in the era of the mass army and in leading to its eventual demise. During the nineteenth century the development of the railroad made it possible for the first time to mobilize and feed armies numbering in the millions. During the late twentieth century further advances in transport and communications technology made it possible to deliver explosive force from a distance and with precision, making mass armies less desirable. We find strong support for our technological interpretation using a new data set that measures army size, population mobilization, and methods of recruitment from the beginning of the seventeenth century. In so doing we also consider several other plausible determinants of military mobilization. Contrary to what is so often suggested by scholars, we find little evidence that the French Revolution and the invention of the concept of "the nation in arms" was associated with a substantial increase in levels of mobilization across nations. Even for the French case alone, the magnitude of what is sometimes referred to as the "Napoleonic watershed" was smaller than what is often believed. |
| Keywords: | Military, Security, Soldiers, Technological Change, Technology, Technology Adoption, War, Warfare |
| JEL: | F52 N4 N7 O33 |
| Date: | 2012–10 |
| URL: | http://d.repec.org/n?u=RePEc:ial:wpaper:5/2012&r=his |
| By: | James Fenske |
| Abstract: | At the start of the Second World War, British policies restricted rubber planting in Nigeria’s Benin region. After Japan occupied Southeast Asia, Britain encouraged maximum production of rubber in Benin. Late in the war, officials struggled with the planting boom that had occurred. The war was a period of both continuity and change. Producers gained experience and capital. Forestry policies restricting planting survived, and output quality continued to occupy officials after the war. The colonial state was hindered by a lack of knowledge and resources, and by its pursuit of conflicting objectives in giving incentives to both producers and traders. |
| Date: | 2012–10–05 |
| URL: | http://d.repec.org/n?u=RePEc:oxf:wpaper:number-107&r=his |
| By: | Claudia Rei (Department of Economics, Vanderbilt University) |
| Abstract: | In the sixteenth and seventeenth centuries, inter-continental trade brought with it a novel form of organizing business: the multinational firm. Headquartered in Europe and operating in Asia, the success of the East India Companies depended largely on the management of overseas outposts, as well as their labor force. Using a dataset of 115 workers hired in Europe to work in Asia, I present the internal structure of civil servants careers and wages in the Dutch East India Company in the eighteenth century. This early modern firm mimics well current theories of internal labor markets: there are stable career paths, fast tracks in promotions, and sizable returns to tenure. |
| Keywords: | merchant empires, careers, returns to tenure |
| JEL: | N0 |
| Date: | 2012–12–08 |
| URL: | http://d.repec.org/n?u=RePEc:van:wpaper:vuecon-12-00007&r=his |
| By: | Gregg Huff |
| Abstract: | This paper analyzes how Japan financed its World War II occupation of Southeast Asia, the transfer of resources to Japan, and the monetary and inflation consequences of Japanese policies. In Malaya, Burma, Indonesia and the Philippines, the issue of military scrip to pay for resources and occupying armies greatly increased money supply. Despite high inflation, hyperinflation hardly occurred because of a sustained transactions demand for money, because of Japan’s strong enforcement of monetary monopoly, and because of declining Japanese military capability to ship resources home. In Thailand and Indochina, occupation costs and bilateral clearing arrangements created near open-ended Japanese purchasing power and allowed the transfer to Japan of as much as a third of Indochina’s annual GDP. Although the Thai and Indochinese governments financed Japanese demands mainly by printing large quantities of money, inflation rose only in line with monetary expansion due to money’s continued use as a store of value in rice-surplus areas. |
| Keywords: | War, Financial and macroeconomic crises, Resource transfer, Occupation costs, Bilateral clearing arrangements, Seigniorage, Hyperinflation, Greater East Asia Co-Prosperity |
| Date: | 2012–10–09 |
| URL: | http://d.repec.org/n?u=RePEc:oxf:wpaper:number-109&r=his |
| By: | James Fenske |
| Abstract: | Although Nigeria’s Benin region was a major rubber producer in 1960, the industry faltered before 1921. I use labour scarcity and state capacity to explain why rubber did not take hold in this period. The government was unable to protect Benin’s rubber forests from over-exploitation. Plantations found it difficult to recruit workers, and the government was unwilling to allow expatriates to acquire land. Colonial officials promoted the development of “communal†plantations, but these suffered due to labour scarcity and a state that was short on staff and equipment, and dependent on local chiefs. |
| Date: | 2012–10–08 |
| URL: | http://d.repec.org/n?u=RePEc:oxf:wpaper:number-108&r=his |
| By: | Giuliano, Paola (University of California, Los Angeles); Nunn, Nathan (Harvard University) |
| Abstract: | We provide evidence that a history of democracy at the local level is associated with contemporary democracy at the national level. Auxiliary estimates show that a tradition of local democracy is also associated with attitudes that favor democracy, with better quality institutions, and higher level of economic development. |
| Keywords: | democracy, historical persistence, local institutions |
| JEL: | N30 P0 Z1 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7156&r=his |
| By: | Arthur Downing |
| Abstract: | Participation in ‘friendly societies’ (or other cooperative organisations) is often used as proxy for measuring the stock of social capital. This is too simplistic. Friendly societies underwent radical changes over the nineteenth century and contemporaries regularly demoaned that sociability, member participation and conviviality had been in steady decline over the second half of the century. This paper investigates the social relations between friendly society members. Part one looks at the importance of lynchpin ‘social capitalists’ in the functioning of lodges. Parts two and three examine how lodges generated social capital and how they relied on social network ties between members to function. Part four applies network analysis to proposition books to assess ‘intra’ lodge relationships between members. As friendly societies grew in size they became more business like. In turn the emphasis shifted from sociability and conviviality to insurance provision. In the process social capital was squandered, but the welfare function of these organisations was temporarily safeguarded. |
| Date: | 2012–10–02 |
| URL: | http://d.repec.org/n?u=RePEc:oxf:wpaper:number-105&r=his |
| By: | Matthew Jaremski (Department of Economics, Colgate University); Peter Rousseau (Department of Economics, Vanderbilt University) |
| Abstract: | The “Federalist financial revolution†may have jump-started the U.S. economy into modern growth, but the Free Banking System (1837-1862) did not play a direct role in sustaining it. Despite lowering entry barriers and extending banking into developing regions, we find in county-level data that free banks had little or no effect on growth. The result is not just a symptom of the era, as state-chartered banks seem to have strong and positive effects on manufacturing and urbanization. |
| Keywords: | Free banking; antebellum banking; financial liberalization; finance-led growth |
| JEL: | E0 N0 |
| Date: | 2012–12–13 |
| URL: | http://d.repec.org/n?u=RePEc:van:wpaper:vuecon-12-00012&r=his |
| By: | Aled Davies |
| Abstract: | How far were monetary targets imposed on the post-1974 Labour Government by international and domestic financial markets enthused with the doctrines of ‘monetarism’? The following paper attempts to answer this question by demonstrating the complex and contingent nature of the ascent of British ‘monetarism’ after 1968. It describes the post-devaluation valorisation of the ‘money supply’ which led investors to realign their expectations with the behaviour of the monetary aggregates. The collapse of the gobal fixed-exchange rate regime, coupled with vast domestic inflationary pressures after 1973, determined that investors came to employ the ‘money supply’ as a convenient new measure with which to assess the ‘soundness’ of British economic management. The critical juncture of the 1976 Sterling crisis forced the Labour Government into a reluctant adoption of monetary targets as part of a desperate attempt to regain market confidence. The result was to impose significant constraints on the Government’s economic policymaking freedom, as attempts were made to retain favourable money supply figures exposed to the short-term volatility of increasingly-globalised and highly-capitalized financial markets. |
| Date: | 2012–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:oxf:wpaper:number-104&r=his |
| By: | James Fenske |
| Abstract: | State capacity matters for growth. I test Bates' explanation of pre-colonial African states. He argues that trade across ecological boundaries promoted states. I find that African societies in ecologically diverse environments had more centralized states. This is robust to reverse causation, omitted heterogeneity, and alternative interpretations of the link between diversity and states. Ecological diversity also predicts states outside of Africa. I test mechanisms connecting trade to states, and find that trade supported class stratification between rulers and ruled. I underscore the importance of ethnic institutions and inform our knowledge of the effects of geography and trade on institutions. |
| Date: | 2012–11–05 |
| URL: | http://d.repec.org/n?u=RePEc:oxf:wpaper:wpf/2012-18&r=his |
| By: | Mehmet Balcilar (Department of Economics, Eastern Mediterranean University, Famagusta, North Cyprus,via Mersin 10, Turkey); Rangan Gupta (Department of Economics, University of Pretoria); Stephen M. Miller (College of Business, University of Las Vegas, Nevada) |
| Abstract: | This paper considers the role of the real housing price in the Great Depression. More specifically, we examine structural stability of the relationship between the real housing price and real GDP per capita. We test for structural change in parameter values, using a sample of annual US data from 1890 to 1952. The paper examines the long-run and short-run dynamic relationships between the real housing price and real GDP per capita to determine if these relationships experienced structural change over the sample period. We find that temporal Granger causality exists between these two variables only for sub-samples that include the Great Depression. For the other sub-sample periods as well as for the entire sample period no relationship exists between these variables. |
| Keywords: | Great Depression, Real House Price, Real GDP per Capita, Structural change |
| JEL: | C32 E32 R31 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:pre:wpaper:201308&r=his |
| By: | James Fenske |
| Abstract: | The conventional view is that an increase in the value of a natural resource can lead to private property over it. Many Igbo groups in Nigeria, however, curtailed private rights over palm trees in response to the palm produce trade of the nineteenth and early twentieth centuries. I present a simple game between a resource owner and a thief. An increase in the resource price leads the owner to prefer a communal harvesting arrangement that simplifies monitoring, leaving the thief no worse off. I use this model along with colonial court records to explain property disputes in interwar Igboland. |
| Date: | 2012–11–19 |
| URL: | http://d.repec.org/n?u=RePEc:oxf:wpaper:wps/2012-19&r=his |
| By: | John B. Taylor (Stanford University) |
| Abstract: | This paper assesses the relative effectiveness of central bank independence versus policy rules for the policy instruments in bringing about good economic performance. It examines historical changes in (1) macroeconomic performance, (2) the adherence to rules-based monetary policy, and (3) the degree of central bank independence. Macroeconomic performance is defined in terms of both price stability and output stability. Factors other than monetary policy rules are examined. Both de jure and de facto central bank independence at the Fed are considered. The main finding is that changes in macroeconomic performance during the past half century were closely associated with changes the adherence to rules-based monetary policy and in the degree of de facto monetary independence at the Fed. But changes in economic performance were not associated with changes in de jure central bank independence. Formal central bank independence alone has not generated good monetary policy outcomes. A rules-based framework is essential. |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:sip:dpaper:12-009&r=his |
| By: | Allan Collard-Wexler; Jan De Loecker |
| Abstract: | We measure the impact of a drastic new technology for producing steel – the minimill – on the aggregate productivity of U.S. steel producers, using unique plant-level data between 1963 and 2002. We find that the sharp increase in the industry's productivity is linked to this new technology, and operates through two distinct mechanisms. First, minimills displaced the older technology, called vertically integrated production, and this reallocation of output was responsible for a third of the increase in the industry's productivity. Second, increased competition, due to the expansion of minimills, drove a substantial reallocation process within the group of vertically integrated producers, driving a resurgence in their productivity, and consequently of the industry's productivity as a whole. |
| JEL: | L1 O3 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:18739&r=his |
| By: | Becker, Sascha O. (University of Warwick and CAGE); Ludger Woessmann, Ludger (University of Munich and Ifo Institute) |
| Abstract: | The interplay between religion and the economy has occupied social scientists for long. We construct a unique panel of income and Protestant church attendance for six waves of up to 175 Prussian counties spanning 1886-1911. The data reveal a marked decline in church attendance coinciding with increasing income. The cross-section also shows a negative association between income and church attendance. But the association disappears in panel analyses, including first differenced models of the 1886-1911 change, panel models with county and time fixed effects, and panel Granger-causality tests. The results cast doubt on causal interpretations of the religion economy nexus in Prussian secularization. Key words: Religion ; secularization ; Prussian economic history JEL classification: Z12 ; N33 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:wrk:warwec:1003&r=his |
| By: | Michalopoulos, Constantine; Ng, Francis |
| Abstract: | This paper reviews trends and patterns in developing countries'trade from 1980 to 2010. During the 30-year span, world trade expanded rapidly, especially in developing countries in the last decade. A similar picture emerges in trade in services. These overall trends, however, mask different trade patterns during some of the time periods and among different developing countries and groups. For example, except for Asia, the 1980s were pretty much a"lost"decade for many developing countries and groups. But that changed in the 1990s and 2000s, with trade by all major developing countries growing faster than developed countries. From 1980 to 2000, trade by Least Developed Countries grew much more slowly than that of developing countries as a whole. But those countries saw the fastest growth in trade in the following decade. This strong overall trade performance -- with some exceptions (for example Sub-Sahara Africa in the manufacturing trade) -- raises questions about sustainability, trade policy and the architecture of the trading system. |
| Keywords: | Emerging Markets,Economic Theory&Research,Trade Policy,Inequality,Income |
| Date: | 2013–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:6334&r=his |
| By: | James Fenske; Namrata Kala |
| Abstract: | African societies exported more slaves in colder years. Lower temperatures reduced mortality and raised agricultural yields, lowering slave supply costs. Our results help explain African participation in the slave trade, which predicts adverse outcomes today. We use an annual panel of African temperatures and port-level slave exports to show that exports declined when local temperatures were warmer than normal. This result is strongest where African ecosystems are least resilient to climate change. Cold weather shocks at the peak of the slave trade predict lower economic activity today. We support our interpretation using the histories of Whydah, Benguela, and Mozambique. |
| Date: | 2012–12–25 |
| URL: | http://d.repec.org/n?u=RePEc:oxf:wpaper:wps/2012-23&r=his |