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The Historical Roots of Firm Access to Finance: Evidence from the African Slave Trade

69 Pages Posted: 5 Dec 2012 Last revised: 29 Aug 2014

Lamar Pierce

Washington University, Saint Louis - John M. Olin School of Business

Jason Snyder

University of California, Los Angeles (UCLA) - Anderson School of Management

Date Written: August 27, 2014

Abstract

This paper shows that access to finance is a crucial factor in explaining the link between the historical African slave trade and current GDP. We show that (1) the slave trade is strongly linked to modern firm access to finance, (2) the slave trade is associated with reduced access to both formal and trade credit, (3) ethnic fractionalization and intraethnic political centralization are plausible historical channels for this relationship, and (4) while the slave trade is strongly related to access to finance, it cannot explain most other business obstacles, suggesting that long-term shocks to culture are exceptionally important for finance.

Keywords: Trust, Social Capital, Finance, Africa, Growth, Development

Suggested Citation

Pierce, Lamar and Snyder, Jason, The Historical Roots of Firm Access to Finance: Evidence from the African Slave Trade (August 27, 2014). Available at SSRN: https://ssrn.com/abstract=2185146 or http://dx.doi.org/10.2139/ssrn.2185146

Lamar Pierce (Contact Author)

Washington University, Saint Louis - John M. Olin School of Business ( email )

One Brookings Drive
Campus Box 1133
St. Louis, MO 63130-4899
United States
314-935-5205 (Phone)

Jason Snyder

University of California, Los Angeles (UCLA) - Anderson School of Management ( email )

110 Westwood Plaza
Los Angeles, CA 90095-1481
United States

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