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The costs and benefits of microfinance : The market for Dutch East India Company transportbriefen in 18th century Amsterdam

Malinowski, Mikołaj LU (2012) In Social and Economic History Annals 72. p.15-43
Abstract
Contemporary institutions engaged in extending micro-loans do not usually grant such loans to the poor due to the latters’ inability to provide appropriate collateral and their insufficient creditworthiness. In modern times the Dutch East-India Company created a financial instrument called the “transportbrief” which enabled poor employees of the Company to obtain loans on the financial market. The loans were secured with the right to future salaries of the Company’s employees. This article answers the question of how the instrument was able to create a primary and secondary market. The author also discusses the way in which the people engaged in trading in the instrument were able to value it correctly. To analyze the mass source... (More)
Contemporary institutions engaged in extending micro-loans do not usually grant such loans to the poor due to the latters’ inability to provide appropriate collateral and their insufficient creditworthiness. In modern times the Dutch East-India Company created a financial instrument called the “transportbrief” which enabled poor employees of the Company to obtain loans on the financial market. The loans were secured with the right to future salaries of the Company’s employees. This article answers the question of how the instrument was able to create a primary and secondary market. The author also discusses the way in which the people engaged in trading in the instrument were able to value it correctly. To analyze the mass source information collected for the purpose of the research the author used the game theory and the information economy theory, as well as many statistical methods. The transportbrief system worked effectively, but to the cost of significant limitation of the Company employees’ freedom. The purpose of creating the instrument was to safeguard the interests of the Company and to guarantee an inflow of new employees, and not to combat poverty. Despite these flaws the transportbrief is an interesting structure, which reflects the evolution of financial markets; it may also be an inspiration for institutions which nowadays engage in extending micro-loans. (Less)
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author
organization
publishing date
type
Contribution to journal
publication status
published
subject
keywords
economic history, market, transportbrief
in
Social and Economic History Annals
volume
72
pages
29 pages
ISSN
0080-3634
language
English
LU publication?
yes
id
7036ef2f-fbfe-483d-9ab7-64247903d21a
date added to LUP
2016-09-06 16:59:47
date last changed
2016-12-01 16:17:51
@article{7036ef2f-fbfe-483d-9ab7-64247903d21a,
  abstract     = {Contemporary institutions engaged in extending micro-loans do not usually grant such loans to the poor due to the latters’ inability to provide appropriate collateral and their insufficient creditworthiness. In modern times the Dutch East-India Company created a financial instrument called the “transportbrief” which enabled poor employees of the Company to obtain loans on the financial market. The loans were secured with the right to future salaries of the Company’s employees. This article answers the question of how the instrument was able to create a primary and secondary market. The author also discusses the way in which the people engaged in trading in the instrument were able to value it correctly. To analyze the mass source information collected for the purpose of the research the author used the game theory and the information economy theory, as well as many statistical methods. The transportbrief system worked effectively, but to the cost of significant limitation of the Company employees’ freedom. The purpose of creating the instrument was to safeguard the interests of the Company and to guarantee an inflow of new employees, and not to combat poverty. Despite these flaws the transportbrief is an interesting structure, which reflects the evolution of financial markets; it may also be an inspiration for institutions which nowadays engage in extending micro-loans.},
  author       = {Malinowski, Mikołaj},
  issn         = {0080-3634},
  keyword      = {economic history,market,transportbrief},
  language     = {eng},
  pages        = {15--43},
  series       = {Social and Economic History Annals},
  title        = {The costs and benefits of microfinance : The market for Dutch East India Company transportbriefen in 18th century Amsterdam},
  volume       = {72},
  year         = {2012},
}