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: July 2020
Keyword(s): England, Financial Development, Financial Intermediation, growth, interest rate
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

A novel, annual series of interest rates paid by the Corporation of London extracted from archival sources shows that interest rates in London declined by 350 basis points over the 17th century. Most of the decline followed a similar pattern in Amsterdam. Records extracted from the Corporation's archive provide evidence for financial deepening: an increase in the number and volume of debt instruments, an increase in the number of people holding them, and development of a secondary market. Econometric analysis establishes that financial deepening contributed to the convergence of interest rates between London and Amsterdam. England's financial evolution and path towards modern growth date, therefore, to the 17th century.