Capital in a Frontier Economy: Portugal, 1230–1500

Abstract

In this paper we show that Portugal benefitted from comparatively low-interest rates from the 13th century onwards, well before the generalised drop in interest rates in Europe. Contrary to the thesis that frontier economies struggle with high-interest rates and scarcity of capital, we find that the country's low and stable interest rates can be explained by its wide availability of land, combined with monetary stability and a favourable institutional network. These conclusions are built upon an entirely new dataset of interest rates and returns on capital for Portugal in the period 1230–1500.

Institutional investors in the Portuguese credit market (1550–1800): The case of the Misericórdias

“…Due to their perpetual nature, in Iberia, these instruments were much used by religious institutions to acquire revenues to meet the cost of perpetual religious services (Ena Sanjuán 2021) or to ensure grain supply in times of inflation (Rodrigues 2013). Evidence from Portugal shows that, as early as the 13 th century, censos had comparatively low interest rates and creditors' property rights were relatively well protected by formal institutions (Henriques 2020).…”

“…On the interest rates of Portuguese censos before 1500, seeHenriques (2020).11 The effects of regulating the price of credit in Portugal were studied byCosta et al (2018a).104Lisbeth Rodrigues…”