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Small is beautiful : The efficiency of credit markets in the late medieval Holland

Van Zanden, Jan Luiten; Zuijderduijn, Jaco LU and De Moor, Tine (2012) In European Review of Economic History 16(1). p.3-22
Abstract

In this paper, we analyse the functioning of private capital markets in Holland in the late medieval period. We argue that in the absence of banks and state agencies involved in the supply of credit, entrepreneurs' access to credit was determined by two interrelated factors. The first was the quality of property rights protection and the extent to which properties could be used as collateral. The second was the level of interest in borrowing money at the time as well as such borrowing compared with the interest rates on risk-free investments. For our case study, the small town of Edam and its hinterland, De Zeevang, in the fifteenth and sixteenth centuries, we demonstrate that properties were used as collateral on a large scale and that... (More)

In this paper, we analyse the functioning of private capital markets in Holland in the late medieval period. We argue that in the absence of banks and state agencies involved in the supply of credit, entrepreneurs' access to credit was determined by two interrelated factors. The first was the quality of property rights protection and the extent to which properties could be used as collateral. The second was the level of interest in borrowing money at the time as well as such borrowing compared with the interest rates on risk-free investments. For our case study, the small town of Edam and its hinterland, De Zeevang, in the fifteenth and sixteenth centuries, we demonstrate that properties were used as collateral on a large scale and that interest rates on both small and large loans were relatively low (about 6 percent). As a result, many households (whether headed by men or women) owned financial assets and/or debts, and the degree of financial sophistication was relatively high.

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author
publishing date
type
Contribution to journal
publication status
published
subject
in
European Review of Economic History
volume
16
issue
1
pages
20 pages
publisher
Cambridge University Press
external identifiers
  • scopus:84871771011
ISSN
1361-4916
DOI
10.1093/ereh/her007
language
English
LU publication?
no
id
e128f34a-b311-45b1-9938-d4c954d8b9a8
date added to LUP
2016-09-15 16:05:19
date last changed
2017-05-07 04:45:43
@article{e128f34a-b311-45b1-9938-d4c954d8b9a8,
  abstract     = {<p>In this paper, we analyse the functioning of private capital markets in Holland in the late medieval period. We argue that in the absence of banks and state agencies involved in the supply of credit, entrepreneurs' access to credit was determined by two interrelated factors. The first was the quality of property rights protection and the extent to which properties could be used as collateral. The second was the level of interest in borrowing money at the time as well as such borrowing compared with the interest rates on risk-free investments. For our case study, the small town of Edam and its hinterland, De Zeevang, in the fifteenth and sixteenth centuries, we demonstrate that properties were used as collateral on a large scale and that interest rates on both small and large loans were relatively low (about 6 percent). As a result, many households (whether headed by men or women) owned financial assets and/or debts, and the degree of financial sophistication was relatively high.</p>},
  author       = {Van Zanden, Jan Luiten and Zuijderduijn, Jaco and De Moor, Tine},
  issn         = {1361-4916},
  language     = {eng},
  number       = {1},
  pages        = {3--22},
  publisher    = {Cambridge University Press},
  series       = {European Review of Economic History},
  title        = {Small is beautiful : The efficiency of credit markets in the late medieval Holland},
  url          = {http://dx.doi.org/10.1093/ereh/her007},
  volume       = {16},
  year         = {2012},
}