Credit Rationing and Crowding out during the Industrial Revolution: Evidence from Hoare's Bank, 1702-1862

Peter Temin and Hans-Joachim Voth

No 211, Working Papers from Barcelona School of Economics

Abstract: Crowding-out during the British Industrial Revolution has long been one of the leading explanations for slow growth during the Industrial Revolution, but little empirical evidence exists to support it. We argue that examinations of interest rates are fundamentally misguided, and that the eighteenth- and early nineteenth-century private loan market balanced through quantity rationing. Using a unique set of observations on lending volume at a London goldsmith bank, Hoare's, we document the impact of wartime financing on private credit markets. We conclude that there is considerable evidence that government borrowing, especially during wartime, crowded out private credit.

Date: 2004-02
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Related works:
Journal Article: Credit rationing and crowding out during the industrial revolution: evidence from Hoare's Bank, 1702-1862 (2005)
Working Paper: Credit rationing and crowding out during the Industrial Revolution: Evidence from Hoare's Bank, 1702-1862 (2005)
Working Paper: Credit Rationing and Crowding-Out During the Industrial Revolution: Evidence from Hoare's Bank, 1702-1862 (2004)
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