Surviving Unstable Property Rights in Early Modern China: A Case Study of Young Brother Bank

Jinsong Zhao () and Hao Pang ()
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Jinsong Zhao: School of Economics, Southwestern University of Finance and Economics, Chengdu 611130, China
Hao Pang: School of Economics, Peking University, Beijing 100871, China

Frontiers of Economics in China-Selected Publications from Chinese Universities, 2018, vol. 13, issue 3, 505-530

Abstract: China¡¯s banking industry experienced rapid growth during the free access era from 1911 to 1927. However, the reasons private banks were so successful then remain unclear, particularly when property rights were not well protected due to government intervention. Using archived Young Brother Bank documents, we describe the bank¡¯s development from its founding as a family firm through its reinvention from a partnership into a corporation. We focus on organizational form choice and bank performance in this case study. We find that bankers in early modern China gain political connections by placing influential nonfamily members (often, acquisitive local warlords) on boards of directors because this protects them from the depredations of those warlords. This is a precondition for operating family businesses in unstable political circumstances.

Keywords: organizational form; family bank; early modern China; property rights; banking industry (search for similar items in EconPapers)
JEL-codes: G3 K2 N2 (search for similar items in EconPapers)
Date: 2018
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