Information asymmetries and financial intermediation during the Baring crisis: 1880-1890

Juan Flores Zendejas

IFCS - Working Papers in Economic History.WH from Universidad Carlos III de Madrid. Instituto Figuerola

Abstract: This paper analyses the information structure of European investors on the eve of the Baring crisis in 1890. We argue that financial intermediaries were in a privileged position by having the monopoly of information. This situation led to conflicting interests because business and proper investors’ advice were not always compatible, as they are not even today. Even though spreads in secondary market prices between Argentina’s long-term sovereign bonds and U.K. consols remained stable throughout the 1880s, primary market variables such as underwriting fees or total amounts of “money left on the table” in Argentina’s Initial Public Offerings reflect the deteriorating macroeconomic situation of the country. In fact, this paper suggests that lessons from the Baring crisis can be transferred to contemporaneous crises.

Keywords: Investment; Banking; Information; Asymmetries; Financial; Crises; Sudden-Stops; Economic; History (search for similar items in EconPapers)
JEL-codes: F21 F34 F37 G14 G15 G24 N13 N16 (search for similar items in EconPapers)
Date: 2007-10
New Economics Papers: this item is included in nep-his
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:cte:whrepe:wp07-16

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