Credit rationing and crowding out during the industrial revolution
Subtitle: evidence from Hoare's Bank, 1702-1862
By: [by] Peter Temin [and] Hans-Joachim Voth
Contributors: Voth, Hans-Joachim; Massachusetts Institute of Technology. Dept. of Economics
Series: Working paper series / Massachusetts Institute of Technology, Dept. of Economics -- working paper 04-05; Working paper (Massachusetts Institute of Technology. Dept. of Economics) -- no. 04-05.
Publisher: Massachusetts Institute of Technology, Dept. of Economics
Published: 2004
Place of publication: Cambridge, MA
Language: eng
Number of pages: 30
Description: Crowding-out during the British Industrial Revolution has long been one of the leading explanations for slow growth during the Industrial Revolution, but little empirical evidence exists to support it. We argue that examinations of interest rates are fundamentally misguided, and that the eighteenth- and early nineteenth-century private loan market balanced through quantity rationing. Using a unique set of observations on lending volume at a London goldsmith bank, Hoare's, we document the impact of wartime financing on private credit markets. We conclude that there is considerable evidence that government borrowing, especially during wartime, crowded out private credit. Keywords: credit rationing, Napoleonic wars, Industrial Revolution, technological change, crowding out. JEL Classifications: E22, E43, E51, E65, N23, N13.
Notes: "February 1, 2004."

Includes bibliographical references (p. 22-23).

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