The origination and distribution of money market instruments: sterling bills of exchange during the first globalization

Olivier Accominotti, Delio Lucena-Piquero and Stefano Ugolini

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: This article presents a detailed analysis of how liquid money market instruments—sterling bills of exchange—were produced during the first globalization. We rely on a unique dataset that reports systematic information on all 23,493 bills re‐discounted by the Bank of England in the year 1906. Using descriptive statistics and network analysis, we reconstruct the complete network of linkages between agents involved in the origination and distribution of these bills. Our analysis reveals the truly global nature of the London bill market before the First World War and underscores the crucial role played by London intermediaries (acceptors and discounters) in overcoming information asymmetries between borrowers and lenders on this market. The complex industrial organization of the London money market ensured that risky private debts could be transformed into extremely liquid and safe monetary instruments traded throughout the global financial system.

Keywords: money market; industrial organisation; information asymmetry; bill of exchange (search for similar items in EconPapers)
JEL-codes: E42 G23 L14 N20 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2021-11-01
New Economics Papers: this item is included in nep-fdg, nep-his, nep-mon, nep-net and nep-pay
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Published in Economic History Review, 1, November, 2021, 74(4), pp. 892 - 921. ISSN: 0013-0117

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http://eprints.lse.ac.uk/107104/ Open access version. (application/pdf)

Related works:
Journal Article: The origination and distribution of money market instruments: sterling bills of exchange during the first globalization (2021)
Working Paper: The Origination and Distribution of Money Market Instruments: Sterling Bills of Exchange during the First Globalization (2021)
Working Paper: The Origination and Distribution of Money Market Instruments: Sterling Bills of Exchange during the First Globalization (2021)
Working Paper: The Origination and Distribution of Money Market Instruments: Sterling Bills of Exchange during the First Globalisation (2019)
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