The Origination and Distribution of Money Market Instruments: Sterling Bills of Exchange during the First Globalization

Olivier Accominotti, Delio Lucena-Piquero and Stefano Ugolini
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Delio Lucena-Piquero: LEREPS - Laboratoire d'Etude et de Recherche sur l'Economie, les Politiques et les Systèmes Sociaux - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - UT2J - Université Toulouse - Jean Jaurès - UT - Université de Toulouse - Institut d'Études Politiques [IEP] - Toulouse - ENSFEA - École Nationale Supérieure de Formation de l'Enseignement Agricole de Toulouse-Auzeville

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Abstract: This paper presents a detailed analysis of how liquid money market instruments – sterling bills of exchange – were produced during the first globalisation. We rely on a unique data set 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 dimension 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 organisation 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; bill of exchange JEL Classification: E42; G23; L14; N20 (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-his, nep-mon and nep-pay
Note: View the original document on HAL open archive server: https://univ-tlse2.hal.science/hal-03155017v1
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Citations: View citations in EconPapers (5)

Published in The Economic History Review, 2021, 74 (4), pp.892-921. ⟨10.1111/ehr.13049⟩

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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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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03155017

DOI: 10.1111/ehr.13049

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