The Telegraph and Modern Banking Development, 1881-1936

45 Pages Posted: 19 Nov 2019 Last revised: 14 Aug 2020

See all articles by Chen Lin

Chen Lin

The University of Hong Kong - Faculty of Business and Economics

Chicheng Ma

The University of Hong Kong

Yuchen Sun

University of International Business and Economics (UIBE) - School of Banking and Finance

Yuchen Xu

Peking University HSBC Business School

Date Written: July 10, 2020

Abstract

The telegraph was introduced to China in the late 19th century, a time when China also saw the rise of modern banks. Based on this historical context, this paper documents the importance of information technology in banking development. We constructed a data set on the distributions of telegraph stations and banks across 287 prefectures between 1881 and 1936. The results show that the telegraph significantly expanded banks’ branch networks in terms of both number and geographic scope. The effect of the telegraph remains robust when we instrument it using proximity to the early military telegraph trunk.

Keywords: Information technology; telegraph; bank; finance; modern China

JEL Classification: G21, G14, O14, N75

Suggested Citation

Lin, Chen and Ma, Chicheng and Sun, Yuchen and Xu, Yuchen, The Telegraph and Modern Banking Development, 1881-1936 (July 10, 2020). Journal of Financial Economics (JFE), Forthcoming, Available at SSRN: https://ssrn.com/abstract=3483419 or http://dx.doi.org/10.2139/ssrn.3483419

Chen Lin (Contact Author)

The University of Hong Kong - Faculty of Business and Economics ( email )

Pokfulam Road
Hong Kong
China

Chicheng Ma

The University of Hong Kong ( email )

Pokfulam Road
Hong Kong, Pokfulam HK
China

Yuchen Sun

University of International Business and Economics (UIBE) - School of Banking and Finance ( email )

No.10, Huixindong Street
Chaoyang District
Beijing, 100029
China

Yuchen Xu

Peking University HSBC Business School ( email )

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