Working Paper: CEPR ID: DP13502
Authors: Debin Ma
Abstract: This paper surveys the phenomenal transformation of banking and finance, public debt and monetary regimes during 1900-1937, a period of great political instability in Chinese history. To understand why growth in these strategic sectors occurred, I highlight the role of the institutional nexus of Western treaty ports (with Shanghai being the most important) and China Maritime Customs service, a relatively autonomous tax bureaucracy. My new interpretation on the importance of this mechanism sheds new light on the role of Chinese political institutions, the impact of the West and the ongoing Great Divergence debate.
Keywords: China; Financial Revolution; Public Debt; Credible Commitment
JEL Codes: N15; N25; N45; E42
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Weakening of centralized imperial power (H77) | Rise of quasi-political structure (H10) |
| Rise of quasi-political structure (H10) | Facilitation of financial revolution (G29) |
| Establishment and autonomy of China Maritime Customs Service (F13) | Reliable source of revenue for government (H27) |
| Reliable source of revenue for government (H27) | Development of public bond market (H74) |
| Local elites and foreign institutions interplay (F55) | Transformation of banking and finance (G21) |