The LondonStock Exchangeand the Colonial Market

Attard, Bernard; Dejung, Christof; Petersson, Niels P.

doi:10.1017/cbo9781139343220.008

Cited by 3 publications

(4 citation statements)

References 18 publications

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“…Evidence in Alan Hall (1963, p. 75 ff.) and Bernard Attard (2013, pp. 105–7) underscores the early involvement of brokers, in the 1870s at least, in conjunction with the colonial agent for the loan issue (such as colonial banks).…”

Section: The Credit Curse: Micro-structures and Institutional Arrangementioning

confidence: 99%

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“High & Dry”: The Liquidity and Credit of Colonial and Foreign Government Debt and the London Stock Exchange (1880–1910)

Chavaz¹,

Flandreau²

2017

J. Econ. Hist.

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We gather a new database to conduct the first historically informed study of the importance of liquidity and credit for government bonds between 1880 and 1910. We argue that colonial and sovereign debt markets were segmented owing to differences in underlying information asymmetries. The result was heterogeneous pricing of colonial and sovereign debt, and different market microstructures and clienteles, themselves influenced by political, institutional, and financial arrangements. We find that sovereign spreads mainly reflected credit risks, while colonial spreads mainly reflected liquidity risks. Liquidity premia were economically large and significant, contributing between 10 percent and 39 percent of colonial spreads. These findings help understanding why the seemingly dry subject of colonial illiquidity inspired passionate disputes and ground-breaking reforms of financial imperial institutions.

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Section: The Credit Curse: Micro-structures and Institutional Arrangementioning

confidence: 99%

“… 10 See Hall (1963), Suzuki (1994), Sunderland (2004), Flandreau and Flores (2009), Flandreau et al (2010), Sunderland (2013), and Attard (2013) for a discussion of the role of intermediaries in alternative markets. …”

mentioning

confidence: 99%

“High & Dry”: The Liquidity and Credit of Colonial and Foreign Government Debt and the London Stock Exchange (1880–1910)

Chavaz¹,

Flandreau²

2017

J. Econ. Hist.

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“…As research has shown, the segmented markets traded all kinds of foreign securities originated and distributed by different intermediaries. Banks and bank hierarchies differed depending on whether one looked at sovereign debt on the one hand (Suzuki, 1994;Flandreau, Flores, Gaillard, and Nieto-Parra, 2010), or on the other hand at self-governing colonies' government debts (Hall, 1963;Attard, 2013), Crown colonies' debt (Sunderland, 2004) or Indian debt (Sunderland, 2013). One of the major themes in our paper is that the sovereign/colonial segmentation was particularly significant, and that accounting for this segmentation reveals strikingly differential roles for liquidity and credit in the two broader markets.…”

Section: Introductionmentioning

confidence: 99%

“…Attard (2013) argues that the signaling logic described in was relevant to colonies. On the other hand, colonies also received a form of certification from authorities in London, so that the nature of the information asymmetries, not to mention enforcement problems were quite different for colonies and sovereigns, suggesting that the parallel should not be overstretched.26 According toFlandreau (2013) London Stock Exchange brokers could be involved in foreign debt origination in the special case of conversion and issues arising from sovereign debt restructurings, owing to their intimate knowledge of the working of the Exchange's General Purpose Committee which was responsible for authorizing defaulters to issue new loans.…”

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confidence: 99%

'High and Dry': the Liquidity and Credit of Colonial and Foreign Government Debt in the London Stock Exchange (1880-1910)

Flandreau

Chavaz²

2015

SSRN Journal

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We gather the most comprehensive database of government bonds for the first globalisation era to date to conduct the first historically informed study of the importance of liquidity for colonial and sovereign yield spreads. Considering both liquidity and credit shows that the two markets were segmented: credit was the most important factor in the pricing of sovereign debt, but liquidity predominated in the colonial market, explaining 10% to 39% of colonial yield spreads. This reflected both different market microstructures and bond clienteles, themselves influenced by heterogeneous political, institutional and financial arrangements. The flows from the colonies to British 'ordinary' investors in the form of illiquidity premia should be taken into account in future studies of the political economy of empire.

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Minimising Risk: Financial Intermediaries and Bond Issuing in London before the Great War

Mikkelsen

2017

Decision Taking, Confidence and Risk Management in Banks From Early Modernity to the 20th Century

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The LondonStock Exchangeand the Colonial Market

Cited by 3 publications

References 18 publications

“High & Dry”: The Liquidity and Credit of Colonial and Foreign Government Debt and the London Stock Exchange (1880–1910)

“High & Dry”: The Liquidity and Credit of Colonial and Foreign Government Debt and the London Stock Exchange (1880–1910)

'High and Dry': the Liquidity and Credit of Colonial and Foreign Government Debt in the London Stock Exchange (1880-1910)

Minimising Risk: Financial Intermediaries and Bond Issuing in London before the Great War

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