Creation and Development of a Market: The Paris Corporate Bond Market in the 19th Century

Abstract

This paper studies the French corporate bonds market during the 19th century. Despite its importance, the performance of the corporate bonds quoted on the Paris Bourse has never been studied. In order to analyse this market, a price index of the corporate bond market has been created by using modern techniques. The construction of the index is based on an original database created by new data collected directly from the publications of the market authorities during the nineteenth century. Thanks to the index, the risk and the return of the market have been measured. Then we compared the performance of French corporate bonds with those of stocks and government bonds The results show that during the nineteenth century, corporate bonds were the least risky equities of the Paris Bourse. To conclude, the impact of the government guarantee on corporate bonds is also assessed.

Keywords: Corporate Bonds, Bond market Index, Performance of Financial Markets

JEL Classification: C12, G14, G15, N23