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The Efficiency of the Chinese Silver Standard, 1920–1933

Published online by Cambridge University Press:  03 September 2021

Nuno Palma
Associate Professor, Department of Economics, University of Manchester, The Arthur Lewis Building, Oxford Road Manchester M13 9PL, United Kingdom Research Fellow at Instituto de Ciências Sociais, Universidade de Lisboa, Av. Prof. Aníbal Bettencourt 9, 1600-189 Lisboa, Portugal Research Affiliate at CEPR, London, United Kingdom. E-mail:
Liuyan Zhao*
Associate Professor, School of Economics, Peking University, No.5 Yiheyuan Road Haidian District, Beijing, P.R.China 100871.


We test for integration of financial markets in China during 1920-1933 using a new dataset of domestic exchange rates. Our data concerns tael-denominated telegraphic transfers between Shanghai and nine other cities. We find that Chinese financial markets, as measured by the efficiency of silver-point arbitrage, were highly integrated among major commercial hubs in north and central China, but there was a lower level of integration for more remote cities in the south. Our paper presents the first comprehensive assessment of the efficiency of the Chinese silver standard and contributes to a revaluation of market performance during pre-communist China.

© The Economic History Association 2021

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We thank the editor Eric Hilt, two anonymous referees, Markus Eberhardt, Debin Ma, and Meng Wu for comments. Joakim Book, Javier Charotti, Nicholas Gachet, and Nick Ridpath provided research assistance. Financial support to Nuno Palma from Fundaçaõ para a Ciência e a Tecnologia (CEECIND/04197/2017) and to Liuyan Zhao from the National Social Science Foundation of China (20BJL120) and the Seed Grant of School of Economics at Peking University are gratefully acknowledged.



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