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Direct finance in the Dutch Golden Age †
Author(s) -
Gelderblom Oscar,
Jonker Joost,
Kool Clemens
Publication year - 2016
Publication title -
the economic history review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.014
H-Index - 49
eISSN - 1468-0289
pISSN - 0013-0117
DOI - 10.1111/ehr.12285
Subject(s) - scope (computer science) , interest rate , finance , control (management) , economics , business , financial system , monetary economics , management , computer science , programming language
This article analyses private credit operations in Amsterdam in the seventeenth century to explain the absence of deposit banks. The financial system was highly segmented and a combination of declining business margins and narrow interest rate spreads cut the scope for deposit taking. Moreover, merchants had easy access to credit in the form of short‐term loans which could be easily rolled over, or replaced at will. This technique worked well because a market developed providing key functions to control risk and price loans accordingly.