Capital Markets and Colonial Institutions in China
Wolfgang Keller2014
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Abstract
We ask whether the institutions introduced in Chinese Treaty Ports by Western powers from 1842 to 1943 had an impact on capital market development in China as evidenced by interest rates. We estimate annual interest rates for 205 prefectures throughout China over the years 1820-1911 by measuring carrying costs of grain. The key finding are: first, that interest rates in China rose during the 19th century, and were on the whole higher than they were in the 18th century. Second, difference-in-differences estimation shows that treaty port institutions lowered interest rates significantly, not only in the immediate vicinity of the treaty ports but more broadly. The magnitude of the decline was about 25%. 1 Hoover Institution, Stanford University, 434 Galvez, Stanford, CA 94304. Also affiliated with NBER and CEPR. Email: [email protected] 2 Hoover Institution, Stanford University, 434 Galvez, Stanford, CA 94304. Also affiliated with NBER and CEPR. Email: [email protected] ...
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