Financialization of the Early Victorian Economy and the London Stock Exchange

62 Pages Posted: 1 Jun 2016

See all articles by Andrew Odlyzko

Andrew Odlyzko

University of Minnesota - Twin Cities - School of Mathematics and Digital Technology Center

Date Written: May 31, 2016

Abstract

Previously unknown basic statistics are obtained about the operations of the London Stock Exchange (LSE) in early Victorian times. Integration of data from the Bank of England Archive with price reports, press coverage, and other sources produces estimates for volume of transactions, distribution of earnings among dealers, efficiency of the market, and the coverage of available price lists. For example, it is found that for some securities, prices were reported for under 20% of transactions. The LSE was surprisingly small and by some measures also surprisingly efficient. Much of its efficiency appears to have come from its deep involvement in the “shadow banking system” of that era, a connection that appears to have been misunderstood and almost completely neglected in the past. The low levels of activity, the dominance of small investors, and low cost of the system show the very early stages of the “financialization” of the modern economy and provide interesting perspectives on modern developments.

Keywords: Financialization, London Stock Exchange, Course of the Exchange, Market Efficiency, Victorian Financial Markets

JEL Classification: B15, E43, G10, G11, G12, G14, G24, H63, H81, N23

Suggested Citation

Odlyzko, Andrew, Financialization of the Early Victorian Economy and the London Stock Exchange (May 31, 2016). Available at SSRN: https://ssrn.com/abstract=2787154 or http://dx.doi.org/10.2139/ssrn.2787154

Andrew Odlyzko (Contact Author)

University of Minnesota - Twin Cities - School of Mathematics and Digital Technology Center ( email )

127 Vincent Hall
206 Church St. SE
Minneapolis, MN 55455
United States
612-625-6413 (Phone)
612-626-2017 (Fax)

HOME PAGE: http://www.dtc.umn.edu/~odlyzko

Register to save articles to
your library

Register

Paper statistics

Downloads
425
rank
66,137
Abstract Views
1,168
PlumX Metrics