We combine data from subscription lists in rights offers with church records and individual tax returns to study the demography of the Swedish stock market around 1920. The typical shareholder was a middle-aged married man with a high income and university education or business affiliation. Stock ownership was gender contingent and changed over the life cycle. Men became stock market investors before they married, while women became stockholders through marriage. Men continued investing in old age, while women depleted their stock portfolios. Women who failed to marry purchased stocks to provide for their financial future. We relate these life-cycle patterns to mortality risk, migration patterns, and different opportunities for men and women. We conclude that the stock market supported family formation and female emancipation.
This article analyses the integration of Southern Italy into the first wave of financial globalization through the lens of transnational business groups (BGs) and relational infrastructures. Drawing on an original micro-level dataset and employing advanced Social Network Analysis (SNA) techniques, we map the evolving structure of business and financial relationships that connected the Neapolitan periphery to core European financial centres in the nineteenth century.The article offers a relational reinterpretation of peripheral integration, showing that global capitalism advanced not merely through markets or states, but through densely structured networks of trust, influence and institutional proximity. It proposes a methodological and conceptual framework relevant to comparative histories of financial globalization and to rethinking the role of peripheries in shaping, and not just receiving, the trajectories of modern capitalism.
This article examines the repercussions of the European banking crises of 1931 on Argentina's banking sector, emphasizing the role of European banks with branches in the country. While existing literature has focused on the spread of financial instability in Europe and the United States, little attention has been given to the effects on developing economies. Argentina, a key destination for European capital, provides a compelling case study. Using balance sheets, financial statements and archival evidence, this study explores how European banks acted as conduits for the transmission of the 1931 crisis. As parent banks in Europe faced strain, their Argentine affiliates experienced significant deposit withdrawals and were forced to revise their balance sheet strategies, heightening vulnerability within Argentina's banking system. The findings highlight the broader consequences of global financial integration and suggest that the ripple effects of the European meltdown prolonged recessionary pressures in Argentina, altering lending practices long after the initial shock. This research contributes to the historiography of interwar banking, offering a deeper understanding of the dynamics between European and developing economies during the Great Depression, and underscores the need for further exploration of financial instability in peripheral regions.
Do self-imposed short-selling bans stabilise markets or impair them? We study the 1930 restrictions on non-mining shares introduced by the self-regulated Sydney (SSX) and Melbourne (MSX) exchanges one day apart. Using hand-collected daily quotes and trades for four weeks around the bans, we estimate difference-in-differences models by exchange and by listing status, and stratify firms by pre-ban liquidity and returns. Bid-ask spreads widen overall, most for initially illiquid firms and on SSX, while MSX effects are weaker, consistent with brief cross-venue substitution. Trading volumes adjust unevenly, with notable contractions among high-volume non-mining and dual listed firms. Returns show no systematic impact, although relative gains accrued to high-return non-mining firms on SSX. Overall, the bans introduced new frictions in liquidity and participation without providing broad price support. Our results underscore the limited effectiveness of self-regulated short-selling restrictions and offer historical insights for today's self-regulated markets such as cryptocurrency and over-the-counter trading.
We study the effect of democratization on stock market liquidity across Spanish political regimes between 1914 and 1936. We use press news related to mass mobilization in favor of political and redistributive reforms to build a monthly index of political uncertainty, and test its impact on different measures of stock liquidity based on daily data for the Madrid Stock Exchange. Our findings suggest that shifts in political uncertainty decreased trading and increased its price impact after the transition to democracy in 1931, but not in the socio-political mobilization that shook the monarchic regime during World War I and its aftermath. The results are robust to controls for other sources of political, economic and international uncertainty. Our evidence suggests that potential challenges to the socio-economic status quo became more credible after the regime change of 1931 and increased the perceived cost of democratization for wealthy elites. This generated a situation of radical uncertainty about future asset returns, leading to a persistent deterioration of investor participation and market liquidity. Contemporary financial chronicles support this interpretation.
We study the pricing of foreign silver coins circulating in China during the period from 1866 to 1924. Spanish and Mexican silver dollar coins often traded at prices substantially larger than their bullion value. These premiums are associated with global economic and political conditions, proxies for Chinese political and banking uncertainty, and seasonal production cycles and market conditions for China's export commodities. Diagnostic tests using the value of copper money and imports often confirm our interpretation. Our evidence suggests how rational currency traders, bankers, merchants, farmers and consumers sustained an informal monetary system during this era.
In Japan in the 1920s, several financial crises and government policy led to bank mergers and the consolidation and expansion of branch networks. Using unique historical bank branch-level lending and deposit data, we show that branch banking integrated peripheral markets with the rest of the country, with large urban banks - those headquartered in Tokyo and Osaka - using deposit supply shocks in peripheral areas to fund lending in their core markets. While these findings support contemporary concerns about branch banking draining funds from peripheral markets, we argue that the export of liquidity by urban banks likely represented an efficient reallocation of credit, driven primarily by competition in funding markets. Faced with high-yielding lending opportunities in central prefectures, urban banks bid up deposit rates in peripheral areas, raising local banks' funding costs. Local banks responded by lowering intermediation margins and reducing lending to traditional industries, which suggests that they shifted their lending to less risky and more efficient customers. We speculate that this competitive reallocation of capital across regions and sectors allowed banks to maintain a functional specialization in different customer segments, which may explain the continued coexistence of small relationship lenders and large integrated arm's-length lenders in local banking markets.
The objective of this study is to analyze the debate surrounding the transformation of the Bank of Brazil into a central bank in 1923. The article seeks to answer the question: What was the role of a central bank for Brazilian policymakers at that time? Unlike other Latin American countries that established their central banks during this period, Brazil's institution was not the result of any foreign mission. While central banks in other countries were primarily concerned with maintaining the gold standard, in Brazil, the main impetus for establishing a central bank was the need to address cash shortages and expand credit, rather than focusing on monetary discipline. Advocates for the creation of a central bank in Brazil were inspired by the model of Germany's Reichsbank, and part of their theoretical influence came from the German Historical School. Other references cited in the debates included the works of Keynes and Cassel, and the participants of the debate made parallels with other sciences, such as comparing the central bank to elements of mechanical physics. Beyond controlling the money supply, the central bank was seen as an element for the economic development of the country, and there was an emphasis on the bank's private management.
This article analyzes the influence of hurricane strikes on the returns of sovereign bonds issued by Cuba, the Dominican Republic and Haiti between 1905 and 1930. The study uses a fixed effects regression model to isolate the impact of hurricane-induced destruction on bond returns, providing a deeper understanding of market reactions following natural disasters. The article shows that hurricanes during this period, which have the potential to cause significant damage, increase bond returns by an average of 0.9 percent in the same month. This suggests that investors demand a risk premium on sovereign bonds from hurricane-prone regions due to the direct impact and broader economic consequences of these disasters.
This article examines the financial strategies employed by Genoese businessmen in Atlantic Castile during the late fifteenth and early sixteenth centuries, focusing on the relative value of private enterprises. It reveals how the interplay between Castilian market characteristics and the unique financial culture of Genoese merchants predominantly supported short-term and transient economic ventures. These methods significantly reduced the need for centralised corporate structures and redundant accounting procedures, supported by a robust notarial system. Consequently, trading in securities and credit extensions became prominent features of this financial market. The research demonstrates that the widespread use of account money, credit and bills of exchange allowed Ligurians to engage in trade and access markets with flexibility and agility through quantitative and functional economic analyses. It also highlights the importance of various credit arrangements, such as loans, bills of trade, or IOUs, which extend beyond merely deferring payments.
The Great Depression era provides a natural experiment to study the effects of employee stock ownership on productivity due to the unexpected nature of the stock market crash in 1929 and the predetermined expiration of employee stock offerings staggered throughout the 1930s. I collect information on employee stock ownership from reports by the National Industrial Conference Board, annual company reports and other primary sources, and then merge them with the US Census of Manufactures to form the main establishment-level dataset. The results indicate that companies with active programs had significantly lower establishment-level output growth and fewer hours worked per employee than firms with inactive ESOPs post-crash. These negative effects, however, can be mitigated in smaller firms where employees feel their effort level has non-negligible effects. To my knowledge, this is the first study to empirically investigate these early ESOPs as well as address how continuing an employee stock ownership program during a financial crisis affects productivity.
To sustain a protracted war after losing foreign loans and reserves and being sanctioned by the Allies, Japan used its ‘internal financing mechanism’ to gobble up civilian capital through government bonds, unbacked paper currency and interest rate interventions. These tactics aggrandised the size of the monetary base and money supply in Japan’s home islands and colonies, but also created inflationary pressures. To minimise the risk of (hyper)inflation, the government encouraged civilians to save in order to enrich the capital of financial intermediaries who would then absorb the ever-increasing government bonds. The ideal failed as monetary expansion outstripped economic productivity, even though expansionary monetary policy had to be tolerable in order to supply sufficient credit for war production. Imperial Japan’s use of unsecured credit to finance the war, together with its loose exchange controls, led to the diversion of colonial hyperinflationary pressures to the home islands, multiplying the risk of implosion of the ‘internal financing mechanism’. Although draconian currency controls were subsequently introduced, they further disrupted the empire’s economic order, and eventually led to the collapse of the yen bloc.
An intriguing question regarding the relationship between international financial institutions (IFIs) and their Latin American borrowers concerns how and why regime type influences the degree to which the parties are prepared to sign loan agreements. Some scholars highlight a ‘democratic advantage’, while others argue that, on the contrary, a ‘democratic disadvantage’ is evident. This article engages with this scholarly debate, offering a historical perspective on the World Bank’s (WB) lending patterns vis-à-vis Latin America during the Cold War, and more specifically between 1948 and 1988, a period that witnessed both democratic and authoritarian regimes in the region. Drawing on never-before-examined documents from the WB archives and additional primary sources, and analysing WB lending to its four largest Latin American borrowers – Mexico, Colombia, Argentina and particularly Brazil – the article posits a third option, arguing that neither a democratic advantage nor a democratic disadvantage was evident during the period under study. Adhering to its self-declared principle of ‘political neutrality’, as outlined in its Articles of Agreement, and emphasising economic factors, the WB exhibited a clear tendency toward pragmatism and ‘political indifference’. This approach enabled the Bank to maintain its involvement in politically unstable countries like Brazil with minimal interruptions.
The article investigates whether the Bank of Japan followed the so-called rules of the game under the classical gold standard. The article, by estimating a vector autoregressive model of monthly timeseries data for October 1897 to July 1914, finds that the Japanese central bank systematically raised the discount rate in response to a fall in the ratio of monetary gold to banknotes, a worsening of the trade balance, or a depreciation of the Japanese yen against the British pound. In contrast, the discount rate hardly responded to the Bank of England's Bank Rate, suggesting Japan's limited financial integration with Europe. The article argues that the Bank of Japan used the trade balance and the yen–sterling rate as the signals of a proximate or prospective movement in monetary gold. The findings, therefore, strongly suggest that the Bank of Japan sought to preserve gold convertibility as the primary objective of monetary policy. The Japanese central bank's rules-of-the-game-like behaviour challenges the semi-consensual view in the literature that violations of the rules were frequent and pervasive under the classical gold standard.
The purpose of dividends is to distribute income to shareholders. Many stock market investors have only a few shares in their portfolios. For these investors, selling one share to generate income is not an attractive alternative to receiving dividends. We describe the dividend decision process in Sweden and provide detailed analysis of how Swedish listed companies manage dividends around new issuance of shares and stock dividends. We also examine how companies facilitate financial planning for shareholders by separating special and regular dividends, decomposing annual dividends into interest and profit, and smoothing dividends relative to earnings.
The Government Savings Bank of Jamaica (GSB) was created post-emancipation in order to serve the poor as a vehicle for precautionary savings and has been viewed as largely successful in this goal, at least after its restructuring in the late 1860s. We investigate this by examining GSB depositor behaviour after income shocks due to hurricanes. To this end, we combine digitized parish-level GSB account information with a hurricane damage index generated from historical storm tracks. Our results show little evidence of a precautionary savings motive by GSB account holders in that while net account balances and deposits drop after hurricanes, withdrawals and the number of accounts closed also fall. Additionally, the net decrease in account holders seems not to be driven by small savers, who are likely to be the poorest. Our findings are thus more in line with the GSB potentially being used to finance non-necessary consumption.
This article presents the newly reconstructed daily gold price from 1919 to 1968 for the world's primary gold market during the London Gold Fixing auction, when gold was the cornerstone of the world's monetary system. We assess whether this market conformed to the Efficient Markets Hypothesis, which posits that prices are unpredictable, or the Adaptive Markets Hypothesis, which posits that a market efficiency will evolve based on changes in the market structure. We find that the Gold Fixing price was inefficient in periods when prices were market-based from 1919 to 1925 and again in the 1930s when private hoarders began to have a significant impact on the market. We find the Gold Fixing was also inefficient during gold standard periods when central bank interventions limited gold's ability to react to new information, despite two episodes where prices rose above the official ceiling.
The 1920–1 recession did not transpire entirely without federal intervention, as commonly believed. Following lending by several Federal Reserve banks, the federally chartered War Finance Corporation (WFC) lent to support exports and shortly after the recession, it lent aggressively to assist banks in agricultural regions, as numerous bank suspensions resulted from the agricultural depression of the early 1920s. Bank suspensions decreased markedly in 1922 to the lowest annual total during the 1921–33 period. This article assesses the impact of WFC lending on bank suspensions, and to what extent the WFC's provision of liquidity helped to resolve the existing difficulties.
This article re-examines the association between democratization and the cost of borrowing abroad in the first era of globalization. Using two representative datasets the literature offers but employing an improved method for panel event study, we find that democratization's impact on the costs of foreign borrowing is uncertain. In one case, the estimated coefficients are similar to the sign and magnitude of the original study but with larger standard errors, rendering the impact statistically insignificant. In the other case, the estimated coefficients hover around zero and are not statistically different from zero.
