Working Paper: CEPR ID: DP5940
Authors: Marc Flandreau; Christophe Galimard; Clemens Jobst; Pilar Nogus Marco
Abstract: This paper exploits arbitrage conditions for bills of exchange with different maturities to provide new evidence on commercial interest rates in Amsterdam, London, and Paris during the 18th century. The lesson that emerges is that commercial interest rates were very low in all three centers and did not differ much from one location to another. This suggests that a transnational capital market resulting from the Commercial Revolution pre-dated to the British 'Financial Revolution' of the 18th century.
Keywords: early financial derivative products; financial development; financial integration; interest rates
JEL Codes: F31; N23
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| low commercial interest rates in Amsterdam, London, and Paris (N23) | transnational capital market (G15) |
| transnational capital market (G15) | financial development of Amsterdam, London, and Paris (N23) |
| global trading network (F60) | availability of capital at similar costs across Amsterdam, London, and Paris (G00) |
| cyclical properties of interest rates in Paris (E43) | greater seasonal volatility in Paris (G19) |
| local credit markets (G21) | global financial dynamics (F30) |