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The origination and distribution of money market instruments: sterling bills of exchange during the first globalisation

Accominotti, Olivier, Lucena-Piquero, Delio and Ugolini, Stefano (2020) The origination and distribution of money market instruments: sterling bills of exchange during the first globalisation. Economic History Review. ISSN 0013-0117 (In Press)

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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.

Item Type: Article
Official URL: https://onlinelibrary.wiley.com/journal/14680289
Additional Information: © 2020 Economic History Society
Divisions: Economic History
Subjects: H Social Sciences > HC Economic History and Conditions
H Social Sciences > HG Finance
JEL classification: E - Macroeconomics and Monetary Economics > E4 - Money and Interest Rates > E42 - Monetary Systems; Standards; Regimes; Government and the Monetary System
G - Financial Economics > G2 - Financial Institutions and Services > G23 - Pension Funds; Other Private Financial Institutions
L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L14 - Transactional Relationships; Contracts and Reputation; Networks
N - Economic History > N2 - Financial Markets and Institutions > N20 - General, International, or Comparative
Date Deposited: 30 Oct 2020 16:00
Last Modified: 02 Nov 2020 08:42
URI: http://eprints.lse.ac.uk/id/eprint/107104

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