The rise of a financial revolution in Republican China in 1900-1937: an institutional narrative

Debin Ma

Economic History Working Papers from London School of Economics and Political Science, Department of Economic History

Abstract: This paper surveys the phenomenal transformation of banking and finance, public debt and monetary regimes during 1900-1937, a period of great political instability in Chinese history. To understand why sectors which are often most vulnerable to the security of property rights and contract enforcement, have become the vanguard of growth in such an era of uncertainty, I highlight the role of institutions as seen in the form of a business dominated quasi-political structure that grew outside the formal political sphere. This structure rested on the institutional nexus of Western treaty ports (with Shanghai being the important) and China Maritime Customs service, a relatively autonomous tax bureaucracy. By ensuring the credibility of repayment of government bonds, this financial-fiscal mechanism laid the institutional foundation for the rise of modern Chinese banks, a viable market for public debt and increasing supply of reputable convertible bank notes during this era of national dis-integration. Our narrative carries far-reaching implications on the ongoing great divergence debate.

Keywords: China; financial revolution; public debt; credible commitment (search for similar items in EconPapers)
JEL-codes: E22 N15 N25 N45 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2016-02
New Economics Papers: this item is included in nep-cna, nep-fdg and nep-his
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Citations: View citations in EconPapers (6)

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