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Title: Political economy origins of financial markets in Europe and Asia
Authors: Andrianova, Svetlana
Demetriades, Panicos O.
Xu, Chenggang
First Published: Jan-2008
Publisher: Dept. of Economics, University of Leicester
Citation: World Development, 2011, 39 (5), pp. 686-699
Abstract: This paper contributes to the finance-growth literature by examining the political economy origins of some of the most successful financial markets in Europe and Asia. It provides historical evidence from London, Amsterdam and Hong Kong that highlights the essential role played by the government sector in kick-starting financial development. We show that the emergence of financial systems did not occur through laissez-faire approaches and that secure property rights alone were not sufficient for financial development. In the cases of London and Amsterdam, governments created large trade monopolies which were responsible for all the major financial innovations of the time. In the case of Hong Kong, where the financial developmentmodel was bank-based, large banking monopolies with close links to the state were created. We argue that the three examples are not special cases and the role of government in the early stages of financial development has been widespread world-wide.
Series/Report no.: Papers in Economics
DOI Link: 10.1016/j.worlddev.2010.10.001
ISSN: 0305-750X
Type: Report
Rights: This working paper has subsequently been published as World Development, 2011, 39 (5), pp. 686-699. The final published version is available at, doi: 10.1016/j.worlddev.2010.10.001.
Appears in Collections:Reports, Dept. of Economics
Published Articles, Dept. of Economics

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