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