Lending to Lemons: Landschafts-Credit in 18th Century Prussia

Kirsten Wandschneider

No 19159, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The following paper describes the emergence of cooperative mortgage credit associations, called "Landschaften" in 18th century Prussia, and thereby tells the history of mortgage-covered bonds. Landschaften facilitated the refinancing of loans for Prussian estates by issuing covered bonds (Pfandbriefe) that were jointly backed by their members. They relied on dual recourse, cooperative structure, joint liability, and local administration to overcome asymmetric information problems related to lending. Their emergence serves as an example for financial innovation in historical mortgage markets. Pfandbriefe exist to this day and are known for their security. Their success goes back to some of the historical features.

JEL-codes: G21 (search for similar items in EconPapers)
Date: 2013-06
New Economics Papers: this item is included in nep-his
Note: ME
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Citations: View citations in EconPapers (5)

Published as Lending to Lemons: Landschaft Credit in Eighteenth-Century Prussia , Kirsten Wandschneider. in Housing and Mortgage Markets in Historical Perspective , White, Snowden, and Fishback. 2014

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