DOCSLIB.ORG

The Origins and Development of Financial Markets and Institutions: from the Seventeenth Century to the Present

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
The Origins and Development of Financial Markets and Institutions: from the Seventeenth Century to the Present This page intentionally left blank The Origins and Development of Financial Markets and Institutions Collectively, mankind has never had it so good despite periodic economic crises of which the current sub-prime crisis is merely the latest example. Much of this success is attributable to the increasing efficiency of the world’s financial institutions as finance has proved to be one of the most important causal factors in economic performance. In a series of original essays, leading financial and economic historians examine how financial innovations from the seventeenth century to the present have continually challenged established institutional arr- angements forcing change and adaptation by governments, financial intermediaries, and financial markets. Where these have been success- ful, wealth creation and growth have followed. When they failed, growth slowed and sometimes economic decline has followed. These essays illustrate the difficulties of coordinating financial innovations in order to sustain their benefits for the wider economy, a theme that will be of interest to policy makers as well as economic historians. JEREMY ATACK is Professor of Economics and Professor of History at Vanderbilt University. He is also a research associate with the National Bureau of Economic Research (NBER) and has served as co-editor of the Journal of Economic History. He is co-author of A New Economic View of American History (1994). LARRY NEAL is Emeritus Professor of Economics at the University of Illinois at Urbana-Champaign, where he was founding director of the European Union Center. He is a visiting professor at the London School of Economics and a research associate with the National Bureau of Economic Research (NBER). He is the author of many books, including The Rise of Financial Capitalism (Cambridge, 1990) and The Economics of Europe and the European Union (Cambridge, 2007). The Origins and Development of Financial Markets and Institutions From the Seventeenth Century to the Present Jeremy Atack Larry Neal CAMBRIDGE UNIVERSITY PRESS Cambridge, New York, Melbourne, Madrid, Cape Town, Singapore, São Paulo, Delhi, Dubai, Tokyo Cambridge University Press The Edinburgh Building, Cambridge CB2 8RU, UK Published in the United States of America by Cambridge University Press, New York www.cambridge.org Information on this title: www.cambridge.org/9780521895170 © Cambridge University Press 2009 This publication is in copyright. Subject to statutory exception and to the provision of relevant collective licensing agreements, no reproduction of any part may take place without the written permission of Cambridge University Press. First published in print format 2009 ISBN-13 978-0-511-75734-1 eBook (NetLibrary) ISBN-13 978-0-521-89517-0 Hardback Cambridge University Press has no responsibility for the persistence or accuracy of urls for external or third-party internet websites referred to in this publication, and does not guarantee that any content on such websites is, or will remain, accurate or appropriate. For Becky and Peg to whom we owe much Contents List of figures page ix List of tables xii List of contributors xv Preface and acknowledgments xxi 1. Financial innovations and crises: The view backwards from Northern Rock 1 jeremy atack 2. An economic explanation of the early Bank of Amsterdam, debasement, bills of exchange and the emergence of the first central bank 32 stephen quinn and william roberds 3. With a view to hold: The emergence of institutional investors on the Amsterdam securities market during the seventeenth and eighteenth centuries 71 oscar gelderblom and joost jonker 4. Was John Law’s System a bubble? The Mississippi Bubble revisited 99 francois¸ r. velde 5. Sir George Caswall vs. the Duke of Portland: Financial contracts and litigation in the wake of the South Sea Bubble 121 gary s. shea 6. The bell jar: Commercial interest rates between two revolutions, 1688–1789 161 marc flandreau, christophe galimard, clemens jobst and pilar nogues-marco 7. Comparing the UK and US financial systems, 1790–1830 209 richard sylla vii viii Contents 8. Natural experiments in financial reform in the nineteenth century: The Davis and Gallman analysis 241 larry neal 9. Regulatory changes and the development of the US banking market, 1870–1914: A study of profit rates and risk in national banks 262 richard j. sullivan 10. Anticipating the stock market crash of 1929: The view from the floor of the stock exchange 294 eugene n. white 11. The development of “non-traditional” open market operations: Lessons from FDR’s silver purchase program 319 richard c.k. burdekin and marc d. weidenmier 12. The interwar shocks to US–Cuban trade relations: A view through sugar company stock price data 345 alan dye and richard sicotte 13. Central bank reaction functions during the inter-war gold standard: A view from the periphery 388 kirsten wandschneider 14. When do stock market booms occur? The macroeconomic and policy environments of twentieth century booms 416 michael d. bordo and david c. wheelock 15. Lessons from history for the twenty-first century 450 larry neal Index 465 Figures 1.1 “Passing on the Risks.” page 4 1.2 Crisis in the US mortgage market: sub-prime loan volume, sub-prime mortgages as share of all mortgages and mortgage delinquency rates by mortgage type. 7 2.1 Indices of silver per coin. 37 2.2 Mint points for the rixdollar in 1609. 42 2.3 Mint points for the rixdollar and lioncrown, 1609 and 1615. 42 2.4 Seigniorage and penalties for rixdollars in 1607, in florins per day. 43 2.5 Mint points for heavy and debased coins, 1610 to 1620. 48 2.6 Mint points for the rixdollar, the debased rixdollar and the patagon, 1619–1621. 50 2.7 Production of heavy silver coins at five provincial mints. 50 2.8 Lioncrown seigniorage and penalties, in florins per day. 52 2.9 Rixdollar seigniorage and penalties, in florins per day. 52 2.10 Seigniorage and penalties for rixdollars in 1620, in florins per day. 53 2.11 Wisselbank deposits and debasement. 53 2.12 Mint points for the rixdollar, lioncrown and patagon, 1622–1638. 55 2.13 Dutch CPI and production of heavy silver coin. 56 2.14 Effects of the 1638 toleration. 58 2.15 Deposits at the Amsterdam Wisselbank. 62 3.1 The income from real estate, securities, and all investment as a percentage of total income at the Burgerweeshuis, 1639–1779. 74 3.2 Government bonds purchases by the Burgerweeshuis, 1650–1800. 77 3.3 The composition of the annual income of Amsterdam’s Oudezijds Huiszittenhuis in the eighteenth century. 79 ix x List of figures 3.4 The nominal value of obligations issued by Holland in the portfolio of Amsterdam’s Nieuwezijds Huiszittenhuis, 1600–1800. 80 3.5 The value of financial assets in the portfolios of several Amsterdam guilds, 1650–1800. 87 4.1 French public finances before and after the System. 108 4.2 Prices of shares in the Compagnie des Indes. From June 1720 to February 1721. 109 6.1 Summary of interest rates, 1450–1889. 165 6.2 Amsterdam shadow interest rate, from London Course of Exchange (%). 187 6.3 London shadow interest rate, from Amsterdam Course of Exchange (%). 188 6.4 Paris shadow interest rate, from London Course of Exchange (%). 188 6.5 Commercial rates, five-year moving averages (%). 190 6.6 Seasonality in interest rates, 1740–1770. 192 6.7 Seasonality in interest rates, 1770–1789. 192 6.8 Paris shadow interest rate, from London and Amsterdam (%). 194 6.9 Britain: various interest rates (%). 196 6.10 France: various interest rates (%). 196 9.1 Profit rates of national banks by region. 268 9.2 Structural profit premia and risk. 284 9.3 Capitalization of US national banks, 1870 to 1914. 285 10.1 Price of a seat on the NYSE. 298 10.2 Cumulative abnormal monthly returns to NYSE seat, 1928–1929. 302 10.3 Actual and forecast monthly NYSE seat. 304 10.4 The Curb Exchange, 1926–1933. 311 10.5 Regional exchanges, 1927–1930. 311 10.6 Actual and forecast monthly Curb seat prices, 1928–1930. 315 11.1 Construction permits in silver and non-silver states, 1931–1938. 326 11.2 Personal income in silver and non-silver states, 1929–1938. 326 11.3 Silver, non-silver money, and prices, 1934:1–1939:6. 328 11.4 Non-silver-state impulse responses (ordering #1). 329 11.5 Silver-state impulse responses (ordering #1). 330 11.6 Non-silver-state impulse responses (ordering #2). 332 11.7 Silver-state impulse responses (ordering #2). 333 List of figures xi 11.8 Historical decompositions of SSTATES. 335 11.9 Non-silver-state impulse responses for structural model. 337 11.10 Silver-state impulse responses for structural model. 338 11.11 Non-silver-state impulse responses for monetary base. 340 11.12 Silver-state impulse responses for monetary base. 341 12.1 Sugar prices, cif New York. 351 12.2 Sugar-company equity indices. 357 12.3 Moving-window exclusion tests on structural breaks. 368 12.4A Successive fixed-window exclusion tests on iterative structural breaks, January 1921–October 1926. 370 12.4B Successive fixed-window exclusion tests on iterative structural breaks, April 1927–December 1931. 371 12.5A Market risk of sugar company stocks by supplier area. 373 12.5B Industry risk of sugar company stocks by supplier area. 373 13.1 Index of industrial production (1938¼100). 403 13.2A Bank rates for Britain, Austria, and Germany. 406 13.2B Bank rates for Czechoslovakia, Hungary, and Poland. 406 13.3 Frequency and magnitude of bank rate changes ( January 1925–December 1931). 407 14.1 Number of countries with an ongoing stock market boom in given month, 1924–2000. 425 14.2 Five-year moving average correlation of cross-country returns.
Load more

Recommended publications
  • Explaining Financial Market Facts: the Importance of Incomplete Markets and Transaction Costs (P
    On the Emergence of Parliamentary Government: The Role of Private Information (p. 2) Edward J. Green Explaining Financial Market Facts: The Importance of Incomplete Markets and Transaction Costs (p. 17) S. Rao Aiyagari 1992 Contents (p. 32) 1992 Staff Reports (p. 33) Federal Reserve Bank of Minneapolis Quarterly Review voi.17.no. 1 ISSN 0271-5287 This publication primarily presents economic research aimed at improving policymaking by the Federal Reserve System and other governmental authorities. Any views expressed herein are those of the authors and not necessarily those of the Federal Reserve Bank of Minneapolis or the Federal Reserve System. Editor: Arthur J. Rolnick Associate Editors: S. Rao Aiyagari, John H. Boyd, Warren E. Weber Economic Advisory Board: Nobuhiro Kiyotaki, Jim Schmitz, Neil Wallace Managing Editor: Kathleen S. Rolfe Article Editor/Writers: Patricia C. Haswell, Kathleen S. Rolfe, Martha L. Starr Designer: Phil Swenson Associate Designer: Beth Grorud Typesetters: Jody Fahland, Correan M. Hanover Editorial Assistant: Correan M. Hanover Circulation Assistant: Cheryl Vukelich The Quarterly Review is published by the Research Department Direct all comments and questions to of the Federal Reserve Bank of Minneapolis. Subscriptions are Quarterly Review available free of charge. Research Department Articles may be reprinted if the reprint fully credits the source— Federal Reserve Bank of Minneapolis the Minneapolis Federal Reserve Bank as well as the Quarterly P.O. Box 291 Review. Please include with the reprinted article some version of Minneapolis, Minnesota 55480-0291 the standard Federal Reserve disclaimer and send the Minneapo- (612-340-2341 / FAX 612-340-2366). lis Fed Research Department a copy of the reprint.
    [Show full text]
  • A Financial System That Creates Economic Opportunities Nonbank Financials, Fintech, and Innovation
    U.S. DEPARTMENT OF THE TREASURY A Financial System That Creates Economic Opportunities A Financial System That T OF EN TH M E A Financial System T T R R A E P A E S That Creates Economic Opportunities D U R E Y H T Nonbank Financials, Fintech, 1789 and Innovation Nonbank Financials, Fintech, and Innovation Nonbank Financials, Fintech, TREASURY JULY 2018 2018-04417 (Rev. 1) • Department of the Treasury • Departmental Offices • www.treasury.gov U.S. DEPARTMENT OF THE TREASURY A Financial System That Creates Economic Opportunities Nonbank Financials, Fintech, and Innovation Report to President Donald J. Trump Executive Order 13772 on Core Principles for Regulating the United States Financial System Steven T. Mnuchin Secretary Craig S. Phillips Counselor to the Secretary T OF EN TH M E T T R R A E P A E S D U R E Y H T 1789 Staff Acknowledgments Secretary Mnuchin and Counselor Phillips would like to thank Treasury staff members for their contributions to this report. The staff’s work on the report was led by Jessica Renier and W. Moses Kim, and included contributions from Chloe Cabot, Dan Dorman, Alexan- dra Friedman, Eric Froman, Dan Greenland, Gerry Hughes, Alexander Jackson, Danielle Johnson-Kutch, Ben Lachmann, Natalia Li, Daniel McCarty, John McGrail, Amyn Moolji, Brian Morgenstern, Daren Small-Moyers, Mark Nelson, Peter Nickoloff, Bimal Patel, Brian Peretti, Scott Rembrandt, Ed Roback, Ranya Rotolo, Jared Sawyer, Steven Seitz, Brian Smith, Mark Uyeda, Anne Wallwork, and Christopher Weaver. ii A Financial System That Creates Economic
    [Show full text]
  • Merchants and the Origins of Capitalism
    Merchants and the Origins of Capitalism Sophus A. Reinert Robert Fredona Working Paper 18-021 Merchants and the Origins of Capitalism Sophus A. Reinert Harvard Business School Robert Fredona Harvard Business School Working Paper 18-021 Copyright © 2017 by Sophus A. Reinert and Robert Fredona Working papers are in draft form. This working paper is distributed for purposes of comment and discussion only. It may not be reproduced without permission of the copyright holder. Copies of working papers are available from the author. Merchants and the Origins of Capitalism Sophus A. Reinert and Robert Fredona ABSTRACT: N.S.B. Gras, the father of Business History in the United States, argued that the era of mercantile capitalism was defined by the figure of the “sedentary merchant,” who managed his business from home, using correspondence and intermediaries, in contrast to the earlier “traveling merchant,” who accompanied his own goods to trade fairs. Taking this concept as its point of departure, this essay focuses on the predominantly Italian merchants who controlled the long‐distance East‐West trade of the Mediterranean during the Middle Ages and Renaissance. Until the opening of the Atlantic trade, the Mediterranean was Europe’s most important commercial zone and its trade enriched European civilization and its merchants developed the most important premodern mercantile innovations, from maritime insurance contracts and partnership agreements to the bill of exchange and double‐entry bookkeeping. Emerging from literate and numerate cultures, these merchants left behind an abundance of records that allows us to understand how their companies, especially the largest of them, were organized and managed.
    [Show full text]
  • World Bank: Roadmap for a Sustainable Financial System
    A UN ENVIRONMENT – WORLD BANK GROUP INITIATIVE Public Disclosure Authorized ROADMAP FOR A SUSTAINABLE FINANCIAL SYSTEM Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized NOVEMBER 2017 UN Environment The United Nations Environment Programme is the leading global environmental authority that sets the global environmental agenda, promotes the coherent implementation of the environmental dimension of sustainable development within the United Nations system and serves as an authoritative advocate for the global environment. In January 2014, UN Environment launched the Inquiry into the Design of a Sustainable Financial System to advance policy options to deliver a step change in the financial system’s effectiveness in mobilizing capital towards a green and inclusive economy – in other words, sustainable development. This report is the third annual global report by the UN Environment Inquiry. The first two editions of ‘The Financial System We Need’ are available at: www.unep.org/inquiry and www.unepinquiry.org. For more information, please contact Mahenau Agha, Director of Outreach ([email protected]), Nick Robins, Co-director ([email protected]) and Simon Zadek, Co-director ([email protected]). The World Bank Group The World Bank Group is one of the world’s largest sources of funding and knowledge for developing countries. Its five institutions share a commitment to reducing poverty, increasing shared prosperity, and promoting sustainable development. Established in 1944, the World Bank Group is headquartered in Washington, D.C. More information is available from Samuel Munzele Maimbo, Practice Manager, Finance & Markets Global Practice ([email protected]) and Peer Stein, Global Head of Climate Finance, Financial Institutions Group ([email protected]).
    [Show full text]
  • Victorian Historical Journal
    VICTORIAN HISTORICAL JOURNAL VOLUME 90, NUMBER 2, DECEMBER 2019 ROYAL HISTORICAL SOCIETY OF VICTORIA VICTORIAN HISTORICAL JOURNAL ROYAL HISTORICAL SOCIETY OF VICTORIA The Victorian Historical Journal has been published continuously by the Royal Historical Society of Victoria since 1911. It is a double-blind refereed journal issuing original and previously unpublished scholarly articles on Victorian history, or occasionally on Australian history where it illuminates Victorian history. It is published twice yearly by the Publications Committee; overseen by an Editorial Board; and indexed by Scopus and the Web of Science. It is available in digital and hard copy. https://www.historyvictoria.org.au/publications/victorian-historical-journal/. The Victorian Historical Journal is a part of RHSV membership: https://www. historyvictoria.org.au/membership/become-a-member/ EDITORS Richard Broome and Judith Smart EDITORIAL BOARD OF THE VICTORIAN HISTORICAL JOURNAL Emeritus Professor Graeme Davison AO, FAHA, FASSA, FFAHA, Sir John Monash Distinguished Professor, Monash University (Chair) https://research.monash.edu/en/persons/graeme-davison Emeritus Professor Richard Broome, FAHA, FRHSV, Department of Archaeology and History, La Trobe University and President of the Royal Historical Society of Victoria Co-editor Victorian Historical Journal https://scholars.latrobe.edu.au/display/rlbroome Associate Professor Kat Ellinghaus, Department of Archaeology and History, La Trobe University https://scholars.latrobe.edu.au/display/kellinghaus Professor Katie Holmes, FASSA, Director, Centre for the Study of the Inland, La Trobe University https://scholars.latrobe.edu.au/display/kbholmes Professor Emerita Marian Quartly, FFAHS, Monash University https://research.monash.edu/en/persons/marian-quartly Professor Andrew May, Department of Historical and Philosophical Studies, University of Melbourne https://www.findanexpert.unimelb.edu.au/display/person13351 Emeritus Professor John Rickard, FAHA, FRHSV, Monash University https://research.monash.edu/en/persons/john-rickard Hon.
    [Show full text]
  • HERITAGE LANDSCAPE MANAGEMENT FRAMEWORK Castlemaine Diggings National Heritage Park
    HERITAGE LANDSCAPE MANAGEMENT FRAMEWORK Castlemaine Diggings National Heritage Park Final Report June 2017 Prepared for Parks Victoria Context Pty Ltd 2017 Project Team: John Dyke Chris Johnston Louise Honman Helen Doyle Report Register This report register documents the development and issue of the report entitled Heritage Landscape Management Framework Castlemaine Diggings National Heritage Park undertaken by Context Pty Ltd in accordance with our internal quality management system. Project Issue Notes/description Issue Issued to No. No. Date 2068 1 Interim project report 12.4.2016 Patrick Pigott 2068 2 Heritage Landscape 21.4.2017 Jade Harris Management Framework (Draft) 2068 3 Heritage Landscape 19.6.2017 Jade Harris Management Framework Context Pty Ltd 22 Merri Street, Brunswick VIC 3056 Phone 03 9380 6933 Facsimile 03 9380 4066 Email [email protected] Web www.contextpl.com.au ii CONTENTS 1 SETTING THE SCENE 1 1.1 Introduction 1 Creating a Heritage Landscape Management Framework 1 1.2 Significance of CDNHP 3 1.3 Understanding cultural landscapes 5 2 KEY GOLDFIELDS HERITAGE LANDSCAPES 7 2.1 Historic landscapes and key sites 7 2.2 Community values 10 Engaging with the community 10 Who uses the park? 10 2.3 Themes and stories 11 2.4 Interpretive and visitor opportunities 13 2.5 Key landscape constellations 14 Understanding the landscape character 14 Defining the key landscape constellations 19 Northern constellation – Garfield /Forest Creek 21 Central constellation – Spring Gully Eureka 25 Southern constellation – Vaughan Springs
    [Show full text]
  • Capital Markets
    U.S. DEPARTMENT OF THE TREASURY A Financial System That Creates Economic Opportunities Capital Markets OCTOBER 2017 U.S. DEPARTMENT OF THE TREASURY A Financial System That Creates Economic Opportunities Capital Markets Report to President Donald J. Trump Executive Order 13772 on Core Principles for Regulating the United States Financial System Steven T. Mnuchin Secretary Craig S. Phillips Counselor to the Secretary Staff Acknowledgments Secretary Mnuchin and Counselor Phillips would like to thank Treasury staff members for their contributions to this report. The staff’s work on the report was led by Brian Smith and Amyn Moolji, and included contributions from Chloe Cabot, John Dolan, Rebekah Goshorn, Alexander Jackson, W. Moses Kim, John McGrail, Mark Nelson, Peter Nickoloff, Bill Pelton, Fred Pietrangeli, Frank Ragusa, Jessica Renier, Lori Santamorena, Christopher Siderys, James Sonne, Nicholas Steele, Mark Uyeda, and Darren Vieira. iii A Financial System That Creates Economic Opportunities • Capital Markets Table of Contents Executive Summary 1 Introduction 3 Scope of This Report 3 Review of the Process for This Report 4 The U.S. Capital Markets 4 Summary of Issues and Recommendations 6 Capital Markets Overview 11 Introduction 13 Key Asset Classes 13 Key Regulators 18 Access to Capital 19 Overview and Regulatory Landscape 21 Issues and Recommendations 25 Equity Market Structure 47 Overview and Regulatory Landscape 49 Issues and Recommendations 59 The Treasury Market 69 Overview and Regulatory Landscape 71 Issues and Recommendations 79
    [Show full text]
  • The Changing Landscape of China's Financial System: Is It Ready For
    THE CHANGING LANDSCAPE OF CHINA’S FINANCIAL SYSTEM Yu Zheng Queen Mary University of London and CEPR CHINA’S INTEGRATION INTO THE GLOBAL ECONOMY • 11.4% of global goods trade in 2017 • 2nd largest source of outbound FDI and recipient of inbound FDI from 2015-7 • Impactful in the global technology chain. Second highest in R&D spending in 2018 CHINA’S INTEGRATION INTO THE GLOBAL ECONOMY • 11.4% of global goods trade in 2017 WITH INTEGRATION • 2nd largest source of outbound FDI and recipient of inbound COMES THE FDI from 2015-7 EXPOSURE TO RISK • Impactful in the global technology chain. Second highest in R&D spending in 2018 CHINA’S INTEGRATION INTO THE GLOBAL ECONOMY • Despite the trade frictions, China continues to pursue integration, in particular the integration into the global financial market • Financial system remains largely closed. Foreign ownership accounts for 2% (2%, 6%) in the Chinese banking (bond, stock) sector. • This talk: a close look at the recent initiative of financial sector opening. Risk? Opportunity? A BIT OF BACKGROUND • 40 years of foreign access starts from “the formation of joint venture with certain foreign capital” (People’s Daily, 6/28/1979) • April 10, 1980: Beijing Air Catering Ltd was born, nicknamed “China’s 001 James Wu” by Takungpao （⼤公报） • The story of a “hand-shake” told by the daughter of James Wu, Annie Wu, SBS, JP A BIT OF BACKGROUND • 40 years of foreign access starts from “the formation of joint venture with certain foreign capital” (People’s Daily, 6/28/1979) • April 10, 1980: Beijing Air Catering Ltd was born, nicknamed “China’s 001 James Wu” by Takungpao • In 1995, the first edition of Catalogue of Industries for Guiding Foreign Investment was released: encouraged, restricted, prohibited, and permitted • In 2017, the Catalogue was replaced by a “negative list” approach A BIT OF BACKGROUND • The idea of the “negative list” approach: to emphasise deviations from national treatment.
    [Show full text]
  • Friday, June 21, 2013 the Failures That Ignited America's Financial
    Friday, June 21, 2013 The Failures that Ignited America’s Financial Panics: A Clinical Survey Hugh Rockoff Department of Economics Rutgers University, 75 Hamilton Street New Brunswick NJ 08901 [email protected] Preliminary. Please do not cite without permission. 1 Abstract This paper surveys the key failures that ignited the major peacetime financial panics in the United States, beginning with the Panic of 1819 and ending with the Panic of 2008. In a few cases panics were triggered by the failure of a single firm, but typically panics resulted from a cluster of failures. In every case “shadow banks” were the source of the panic or a prominent member of the cluster. The firms that failed had excellent reputations prior to their failure. But they had made long-term investments concentrated in one sector of the economy, and financed those investments with short-term liabilities. Real estate, canals and railroads (real estate at one remove), mining, and cotton were the major problems. The panic of 2008, at least in these ways, was a repetition of earlier panics in the United States. 2 “Such accidental events are of the most various nature: a bad harvest, an apprehension of foreign invasion, the sudden failure of a great firm which everybody trusted, and many other similar events, have all caused a sudden demand for cash” (Walter Bagehot 1924 [1873], 118). 1. The Role of Famous Failures1 The failure of a famous financial firm features prominently in the narrative histories of most U.S. financial panics.2 In this respect the most recent panic is typical: Lehman brothers failed on September 15, 2008: and … all hell broke loose.
    [Show full text]
  • History of Financial Turbulence and Crises Prof
    History of Financial Turbulence and Crises Prof. Michalis M. Psalidopoulos Spring term 2011 Course description: The outbreak of the 2008 financial crisis has rekindled academic interest in the history of fi‐ nancial turbulence and crises – their causes and consequences, their interpretations by eco‐ nomic actors and theorists, and the policy responses they stimulated. In this course, we use the analytical tools of economic history, the history of economic policy‐ making and the history of economic thought, to study episodes of financial turbulence and crisis spanning the last three centuries. This broad historical canvas offers such diverse his‐ torical examples as the Dutch tulip mania of the late 17th century, the German hyperinflation of 1923, the Great Crash of 1929, the Mexican Peso crisis of 1994/5 and the most recent sub‐ prime mortgage crisis in the US. The purpose of this historical journey is twofold: On the one hand, we will explore the prin‐ cipal causes of a variety of different manias, panics and crises, as well as their consequences – both national and international. On the other hand, we shall focus on the way economic ac‐ tors, economic theorists and policy‐makers responded to these phenomena. Thus, we will also discuss bailouts, sovereign debt crises and bankruptcies, hyperinflations and global re‐ cessions, including the most recent financial crisis of 2008 and the policy measures used to address it. What is more, emphasis shall be placed on the theoretical framework with which contemporary economists sought to conceptualize each crisis, its interplay with policy‐ making, as well as the possible changes in theoretical perspective that may have been precipi‐ tated by the experience of the crises themselves.
    [Show full text]
  • Who Regulates Whom? an Overview of the US Financial Regulatory
    Who Regulates Whom? An Overview of the U.S. Financial Regulatory Framework Updated March 10, 2020 Congressional Research Service https://crsreports.congress.gov R44918 Who Regulates Whom? An Overview of the U.S. Financial Regulatory Framework Summary The financial regulatory system has been described as fragmented, with multiple overlapping regulators and a dual state-federal regulatory system. The system evolved piecemeal, punctuated by major changes in response to various historical financial crises. The most recent financial crisis also resulted in changes to the regulatory system through the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010 (Dodd-Frank Act; P.L. 111-203) and the Housing and Economic Recovery Act of 2008 (HERA; P.L. 110-289). To address the fragmented nature of the system, the Dodd-Frank Act created the Financial Stability Oversight Council (FSOC), a council of regulators and experts chaired by the Treasury Secretary. At the federal level, regulators can be clustered in the following areas: Depository regulators—Office of the Comptroller of the Currency (OCC), Federal Deposit Insurance Corporation (FDIC), and Federal Reserve for banks; and National Credit Union Administration (NCUA) for credit unions; Securities markets regulators—Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC); Government-sponsored enterprise (GSE) regulators—Federal Housing Finance Agency (FHFA), created by HERA, and Farm Credit Administration (FCA); and Consumer protection regulator—Consumer Financial Protection Bureau (CFPB), created by the Dodd-Frank Act. Other entities that play a role in financial regulation are interagency bodies, state regulators, and international regulatory fora. Notably, federal regulators generally play a secondary role in insurance markets.
    [Show full text]
  • Financial Crises: International Dissemination and Consequences in Historical Perspective Editors Mats Larsson and Jan Ottosson
    UPPSALA PAPERS IN BUSINESS AND FINANCIAL HISTORY, 2018, NO. 22 Financial crises: International dissemination and consequences in historical perspective Editors Mats Larsson and Jan Ottosson 1 © UPFBH och författarna ISSN 1104-0726 ISRN UU-EKHI-R— 14— SE Editor: Mats Larsson 2 Title Financial crises: International dissemination and consequences in historical perspective Editors Mats Larsson and Jan Ottosson CONTACT DETAILS Mats Larsson & Jan Ottosson Department of Economic History, Uppsala University Box 513 751 20 Uppsala, Sweden Email: [email protected], jan [email protected] 3 Table of contents INTRODUCTION ...................................................................................................................... 5 Introductory remarks .......................................................................................................... 8 Two centuries of international financial crises — Crises types, patterns and significance....................................................................................................................... 9 Prudential supervision and international cooperation on the financial market since 1965 and its consequences for debt crises ............................... 16 The development of international financial centres and financial crises ...................................................................................................................................................... 27 Comments and discussion .............................................................................................
    [Show full text]