DP13920 The Financial Development of London in the 17th Century Revisited: A View from the Accounts of the Corporation of London

Author(s): Nathan Sussman
Publication Date: August 2019
Date Revised: August 2019
Keyword(s): England, Financial Development, Financial Intermediation, growth, interest rate, Usury
JEL(s): G23, N2, N23, O16, O43
Programme Areas: Economic History
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=13920

We study an overlooked episode of financial development in England during the 17th century. We construct a novel, annual series of interest rates paid by the Corporation of London. We show that: interest rates declined by 350 basis points; Interest rates co-moved with Amsterdam: we attribute half of this decline to the integration of the capital markets of London and Amsterdam and half to the increase in London's financial market liquidity. The reduction of the usury rate lowered interest rates by 50 basis points in the 1650s. England's financial evolution and path towards modern growth date, therefore, to the 17th century.