Working Paper: NBER ID: w19159
Authors: Kirsten Wandschneider
Abstract: The following paper describes the emergence of cooperative mortgage credit associations, called "Landschaften" in 18th century Prussia, and thereby tells the history of mortgage-covered bonds. Landschaften facilitated the refinancing of loans for Prussian estates by issuing covered bonds (Pfandbriefe) that were jointly backed by their members. They relied on dual recourse, cooperative structure, joint liability, and local administration to overcome asymmetric information problems related to lending. Their emergence serves as an example for financial innovation in historical mortgage markets. Pfandbriefe exist to this day and are known for their security. Their success goes back to some of the historical features.
Keywords: No keywords provided
JEL Codes: G21
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Establishment of landschaften (Q24) | Stabilization of the credit market (E44) |
| Landschaften's cooperative structure (P13) | Overcoming asymmetric information issues (D82) |
| Landschaften's design (R14) | Reduction of transaction costs for lenders (G21) |
| Landschaften's design (R14) | Provision of long-term, affordable credit (G21) |
| Establishment of landschaften (Q24) | Lowering of interest rates for agricultural estates (Q14) |
| Pfandbriefe issued by landschaften (H74) | Circulation as safe investments (G12) |