The Economic History Review

Direct finance in the Dutch Golden Age†

Volume 69 Issue 4
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Pages: 1178-1198Authors: Oscar Gelderblom, Joost Jonker, Clemens Kool
Published online: June 20, 2016DOI: 10.1111/ehr.12285

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This article analyses private credit operations in Amsterdam in the seventeenth century to explain the absence of deposit banks. The financial system was highly segmented and a combination of declining business margins and narrow interest rate spreads cut the scope for deposit taking. Moreover, merchants had easy access to credit in the form of short-term loans which could be easily rolled over, or replaced at will. This technique worked well because a market developed providing key functions to control risk and price loans accordingly.