Bonds and Brands: Foundations of Sovereign Debt Markets, 1820-1830

43 Pages Posted: 11 Jan 2010

See all articles by Marc Flandreau

Marc Flandreau

Centre for Economic Policy Research (CEPR)

Juan H. Flores

University of Geneva

Date Written: August 31, 2008

Abstract

How does sovereign debt emerge? In the early nineteenth century, intermediaries’ market power and prestige served to overcome information asymmetries. Relying on insights from finance theory, we argue that capitalists turned to intermediaries’ reputations to guide their investment strategies. Intermediaries could in turn commit or else they would lose market share. This sustained the development of sovereign debt. This new perspective is backed by archival evidence and empirical data, and it suggests why strong but undemocratic states could borrow.

Keywords: intermediaries, reputation and signalling, sovereign debt, intitial public offerings

JEL Classification: G15, G23, N23, N26

Suggested Citation

Flandreau, Marc and Flores, Juan H., Bonds and Brands: Foundations of Sovereign Debt Markets, 1820-1830 (August 31, 2008). Available at SSRN: https://ssrn.com/abstract=1534169 or http://dx.doi.org/10.2139/ssrn.1534169

Marc Flandreau (Contact Author)

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Juan H. Flores

University of Geneva ( email )

102 Bd Carl-Vogt
Genève, CH - 1205
Switzerland

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
149
Abstract Views
1,185
rank
228,917
PlumX Metrics