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The paper examines centuries old informal footwear cluster in India, and describes the instrument of informal trade credit, ingeniously designed and sustained by the market participants. A peculiar feature of this instrument is the shared knowledge of the creditworthiness of the traders. This knowledge is produced and consumed by the market participants as a useful resource in estimating discount on the credit. Using Ostrom’s IAD framework (its modified version) the paper attempts to understand the governance of knowledge commons in the market. In order to do so, it identifies the socio-cultural infrastructure which enables such governance. In helping identify the theoretical link between informal markets and knowledge commons through this case, the paper advances a promising step for future research not only in knowledge commons structures, but also in informal markets around the world.
Plautus’ Pseudolus plays upon the concept of ‘credit’, and reveals the similar nature of the belief that audiences grant to the stage-events and the belief in someone’s credit that underpins borrowing and lending. The Roman understanding of credit in both senses anticipates the modern emergence of the concept of fiction within a modern mercantile economyy.
The First Dynasty, an unbroken succession of Amorite kings, lasted 300 years despite a major rebellion. Babylon had close relationships with the nearby cities Sippar, Kish, and Borsippa. Trade and alliances reached much further. The Sumerian king-lists of earlier times were replaced by Babylonian equivalents, various cities having their own version. Kings briefly recorded major events; names were given to each year of their reign for dating documents. Trade was widespread, by canal and river, or overland by donkey. Royal edicts excluded certain groups from trade. Evidence comes from a profusion of clay tablets. Official letters are plentiful. Priestesses of Marduk carried out trade for Babylon in other cities. The temple of Marduk was built and furnished with a golden throne. Elamite control over several major cities, which left its mark on temple design, was ended by Hammurabi late in his reign; there is a possible connection with Genesis 14:1–16. Regular edicts were issued to release individuals from debt and to regulate trade. The main powers were Halab (Aleppo), Eshnunna, and Larsa, until Hammurabi achieved supremacy and claimed divinity. His successor Samsu-iluna followed his father’s example.
Business confidence is a measure of optimism or pessimism that managers feel about the commercial prospects for their organizations. This paper uses later medieval high-value English credit data as a proxy gauge of merchants’ business confidence or uncertainty. It discusses whether mercantile restriction of credit during the fifteenth-century recession reflects uncertainty, whereby merchants became increasingly risk-averse and so reduced the amount of credit they extended to their customers. It discusses the chronological trends in English lending between 1353 and 1532. This paper examines medieval debt restructuring and argues that this might similarly reflect merchants’ commercial confidence or uncertainty. In contrasting two sample years (1375 and 1433), the paper seeks to identify the motivations and influences that lay behind medieval merchants’ business decisions more fully. It argues that merchants’ investment behavior was guided more by local commercial circumstances than it was by profound economic shocks, such as plague and bullion famine.
The financialization of everyday life has received considerable attention since the 2008 global financial crisis. Financialization is thought to have created active financial subjects through the ability to participate in mainstream financial services. While the lived experience of these mainstream financial subjects has been the subject of close scrutiny, the experiences of financial subjects at the financial fringe have been rarely considered. In the UK, for example, the introduction of High-Cost, Short-Term Credit [HCSTC] or payday loan regulation was designed to protect vulnerable people from accessing unaffordable credit. Exploring the impact of HCSTC regulation is important due to the dramatic decline of the high-cost credit market which helped meet essential needs in an era of austerity. As such, the paper examines the impact of the HCSTC regulation on sixty-four financially marginalized individuals in the UK that are unable to access payday loans. First, we identify the range of socioeconomic strategies that individuals employ to manage their finances to create a typology of financial subjectivity at the financial fringe. Second, we demonstrate how the temporal and precarious nature of financial inclusion at the financial fringe adds nuance to existing debates of the everyday lived experience of financialization.
One of the major problems in the world nowadays is the lack of access to financing for the lower classes, and in developing countries this issue also affects a big part of the middle class. In this chapter, we will analyze innovations that have been implemented in Latin America to help solve the problem of lack of financing in the population of scarce resources, and the companies or organizations behind these innovations. We study companies that are innovative not only in their business model, their group lending work, but also in their social commitment and their integral way of attacking the problem with education and other elements. Additionally, technology has played an important role in the innovation of microfinance institution mainly for the MOP. This chapter analyzes some of the most recent and innovative strategies that microfinancial organizations, dedicated mainly to the MOP population, have created to increase access to their services, and therefore, to improve the financial inclusion of this segment of the population.
The Brazilian developmental state changed significantly after 1985, with new rhetoric about equality, a commitment to fighting inflation, and a three-pronged policy set combining fiscal responsibility, a floating exchange rate, and inflation targeting. Yet many elements of the “old” developmental state remained intact, including a large state role, a complex monetary regime, muscular industrial policies, low economic integration, and a segmented labor market. The fight against inflation generated incentives for politicians to employ “fiscally opaque” policy instruments drawn from the tool kit of the developmental state. The fiscal imperative combined with fiscally opaque instruments contributed to the high cost of credit and low investment, driving firms to demand state succor. The fiscal imperative and the power of interest groups meant that the burden of balancing the fiscal accounts fell disproportionately on the less well-off. The ensuing demand for social spending meant that economic growth, by default, became a residual.
This chapter completes the discussion on fiscal–financial risks and looks at banks, shadow banks, central banks and international linkages. Banks have increased their resilience considerably over the past decade, supported by the international regulatory agenda. However, global indebtedness has increased further and bank balance sheets are often loaded with risky public and private credit. Moreover, there are fiscal risks from market-based finance: highly priced, low-quality credit held partly by a run-prone asset management industry, an under-funded pension industry and large derivative clearing houses. Central banks face risks from large asset holdings. International credit is very high and could transmit problems across borders. International safety nets have grown but so have demands for international support. Given record debt and debt increases, and our lack of knowledge and experience of how fiscal–financial risks will unfold in the future, building resilience is of the highest priority. This vindicates constraints on deficit and debt, such as the Maastricht limits and the regulatory agenda for the financial sector, and it provides a further argument for lean and efficient government.
The South American Funds National Exchequer was established in 1818 to contribute to the consolidation of the public debt of Buenos Aires. It was the first financial innovation since the revolutionary outbreak in Buenos Aires, and its failure allowed the authorities to understand the limits of the fiscal and financial commitment they proposed by means of that institution. Its suppression, in 1821, offered an antecedent to develop a deep reform of the financial institutional matrix of Buenos Aires, based on the Public Credit office, the Amortization Exchequer and the Bank of Buenos Aires. The South American Funds National Exchequer was, thus, the first movement in the negotiation on the terms of the financial commitment assumed by the nascent State. This paper analyzes the 973 accounting entries of the institution, providing an interpretation of that failure and its importance for the course of public finances in Buenos Aires.
Money and credit are ubiquitous in actual economies, but there is an active theoretical debate on whether they are both necessary if they can both be used in all transactions. Recently, Gu et al. (2016) have shown that money and credit cannot be simultaneously essential and debt limits do not matter for the determination of real allocations in a class of monetary economies. In this paper, we revisit their irrelevance result in a monetary economy based on Lagos and Wright (2005), which exhibits a misallocation of liquidity that is common in search models of money. We show that monetary loans, which naturally require the use of both money and credit, implement Pareto superior allocations in which the size of debt limits matters.
This chapter analyzes the development of the mortgage among the new market practices, and new financial instruments, that were critical to the growth of the “empire of credit” stretching across the eighteenth-century Atlantic. The mortgage was an especially important part of this new credit economy because it lay at the nexus between landed and commercial wealth, and played a generative role in financing improvement and diversification. It is not surprising, then, that mortgage law, as a critical component of finance and credit relations, saw real development in this same period. This essay compares and connects the work of brokers, lawyers, and judges who constructed and evaluated mortgage deals, and examines the transmission and testing of the doctrine of the equity of redemption. Particular attention is paid to challenges to the operation of mortgage doctrine in Ireland, and other parts of the British empire, and what these signify for the broader history of legal and economic development in the eighteenth century.
Moving from politics to economics, this chapter investigates the role of Islam in the success of an Islamic-based business association operating in Turkey. MÜSİAD, the Independent Industrialists’ and Businessmen’s Association, was founded to bring together small- and medium-sized enterprises based in Anatolia who, because of their size and their lack of political connections, struggled to succeed in Turkey’s volatile, statist economy. Since its foundation, MÜSİAD seems to have helped these small businesses grow into “Anatolian Tigers,” apparently outpacing non-member firms. While existing theories of identity-based trade would suppose that MÜSİAD’s success rests in its ability to support a reputation mechanism among member firms or, alternatively, because of its new-found political connections to the AKP or privileged access to Islamic micro-credit, I find little empirical support for these hypotheses. Instead, using data at the firm level, I show that MÜSİAD firms succeed by relying on long-term “quasi-integrative” relationships among members, relationships which mimic the benefits of vertical integration enjoyed by larger firms. More specifically, this quasi-integration serves to protect MÜSİAD members during periods of economic volatility, although it proves to less efficient under more stable conditions, including during the period of AKP rule.
Chapter 1 explains why the study of bubbles is important. Bubbles can have huge economic, social and political costs, but some bubbles may be useful. The chapter discusses the origin of the ‘bubble’ metaphor and the definition of a bubble. It then develops a new metaphor and framework for bubbles based on the chemistry of fire - the bubble triangle - in order to better understand their causes and consequences. The three sides of the bubble triangle are marketability, credit and money, and speculation – these correspond to oxygen, fuel and heat in the fire triangle. The spark which sets the bubble fire alight is either technological change or a government policy decision. This analytical framework helps predict when bubbles will occur, when they will burn out and what their economic effects will be. The chapter concludes by outlining the catalogue of 12 historical bubbles that will be examined in the rest of the book.
This chapter argues that questions over what kinds of money Americans should use, often assumed to be settled by the establishment of the Federal Reserve in 1913, persisted throughout the twentieth century and in ongoing debates about who should be allowed what kinds of credit. It narrates the cultural forms of this history by combining critical accounts of the key transitions in the credit economy with new readings of The Wonderful Wizard of Oz. The first section argues that Frank Baum’s 1900 novella is better read through the emergence of retail credit than through the bimetal debates that have dominated its critical reception. The second section reads Victor Fleming’s 1939 film The Wizard of Oz through the debates about the ending of the depression and the shape of New Deal credit and argues that the film’s celebration of this credit obscured its political implications. The final section reads Sidney Lumet’s 1975 The Wiz through the crisis in the New Deal, and the subsequent emergence of neoliberal governance, that the New York financial crisis of the mid-1970s signalled.
This introduction explores a range of theoretical approaches to reading the relationship between literature and credit. It suggests an alternative to the postmodern reading of the ending of the gold standard. It offers a new reading of E. L. Doctorow’s classic postmodern novel Ragtime, one that depends upon neither pastiche nor parody but a return to the varied times of the credit economy.
This book offers a new reading of the relationship between money, culture and literature in America in the 1970s. The gold standard ended at the start of this decade, a moment which is routinely treated as a catalyst for the era of postmodern abstraction. This book provides an alternative narrative, one that traces the racialized and gendered histories of credit offered by the intertextual narratives of writers such as E.L Doctorow, Toni Morrison, Marilyn French, William Gaddis, Thomas Pynchon and Don De Lillo. It argues that money in the 1970s is better read through a narrative of political consolidation than formal rupture as these histories foreground the closing down, rather than opening up, of serious debates about what American money should be and who it should serve. These novels and this moment remain important because they alert us to imagine the alternative histories of credit that were imaginatively proposed but never realized.
New Institutional Economics treats early modern Spain as an example of a state whose political and contracting institutions hindered economic growth. However, the assumption that Spanish political institutions were predatory in this respect has been called into question. This paper challenges the idea that Spain was unable to develop sufficiently good contracting institutions, of which we know relatively little. Using data from Malaga's notarial credit market, I show that legal institutions facilitated contractual compliance in private financial transactions. Specifically, public mortgage registries, which had improved the registration of properties used as collateral since their creation in 1768, favoured the subscription of larger contracts. Furthermore, results suggest that registries could have contributed to the development of a more impersonal credit market.
Contrary to the belief that prisons never predated colonial rule in Africa, this article traces their emergence in the Gold Coast after the abolition of the Atlantic slave trade. During the era of ‘legitimate commerce’, West African merchants required liquidity to conduct long-distance trade. Rather than demand human pawns as interest on loans, merchants imprisoned debtors’ female relatives because women's sexual violation in prison incentivized kin to repay loans. When British colonists entered the Gold Coast, they discovered how important the prisons were to local credit. They thus allowed the institutions to continue, but without documentation. The so-called ‘native prisons’ did not enter indirect rule — and the colonial archive — until the 1940s. Contrary to studies of how Western states used prisons to control black labour after emancipation, this article excavates a ‘debt genealogy’ of the prison. In the Gold Coast, prisons helped manage cash flow after abolition by holding human hostages.