Working Paper: NBER ID: w23800
Authors: Ross Levine; Chen Lin; Wensi Xie
Abstract: We assess how the African slave trade—which had enduring effects on social cohesion—continues to influence financial systems. After showing that the intensity with which people were enslaved and exported from Africa during the 1400 – 1900 period helps account for overall financial development, household access to credit, and firm access to finance, we evaluate three potential mechanisms linking the slave trade to modern finance—information sharing institutions, trust in financial institutions, and the quality of legal institutions. We discover that the slave trade is strongly, negatively related to the information sharing and trust mechanisms but not to the legal mechanism.
Keywords: Financial Development; African Slave Trade; Social Cohesion; Information Sharing; Trust in Financial Institutions
JEL Codes: G21; N27; O16; O55
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| slave exports (J47) | firm access to credit (G21) |
| slave exports (J47) | financial development (O16) |
| slave exports (J47) | household access to credit (G51) |
| slave exports (J47) | quality of information sharing institutions (L15) |
| slave exports (J47) | trust in financial institutions (G21) |
| slave exports (J47) | legal institutions (D02) |