Financial Development and Money Market Integration in Qing China, 1800-1911
15 Pages Posted: 21 Feb 2024
Abstract
This article contributes to a deeper understanding of how financial development impacts money market integration in traditional society. However, no systematic quantitative studies have been conducted because of difficulties in obtaining data. We construct a province-pair dataset of piaohao (Shanxi banks) and silver–copper exchange rates to analyze this problem. We find that the establishment of piaohao significantly promoted the convergence of silver–copper exchange rates between regions. The effect of piaohao is weaker for province pairs where transportation and information transmission are more costly. Attenuating the effects of extreme weather and clustering the piaohao industry are two plausible channels.
Keywords: Piaohao establishmentSilver-copper exchange rateFinancial expansionDifferences-in-differences
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