The Telegraph and Modern Banking Development, 1881-1936

73 Pages Posted: 19 Nov 2019 Last revised: 16 Dec 2019

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

Renmin University of China - School of Finance

Yuchen Xu

The University of Hong Kong; The University of Hong Kong, Faculty of Business and Economics, Students

Date Written: November 8, 2019

Abstract

The telegraph was introduced to China in the late 19th century, a time when China also saw the rise of modern banks. This unique historical context allows us to examine the role of information technology in banking development. We find that the presence of a telegraph significantly increased the number of banks. This effect becomes greater when we instrument the distribution of telegraph stations using the shortest distance to the military telegraph trunk built before the emergence of modern banks (1897). By increasing inter-regional information flow, the telegraph enabled banks to expand their branches to distant areas.

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 (November 8, 2019). 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

Renmin University of China - School of Finance ( email )

Ming De Main Building
Renmin University of China
Beijing, Beijing 100872
China

Yuchen Xu

The University of Hong Kong ( email )

Pokfulam Road
Hong Kong, Pokfulam HK
China

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

Pokfulam Road
Hong Kong
Hong Kong

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