Financing in Europe by Marcella Lorenzini Cinzia Lorandini & D’Maris Coffman

Author:Marcella Lorenzini, Cinzia Lorandini & D’Maris Coffman
Language: eng
Format: epub
Publisher: Springer International Publishing, Cham

Risk Pricing

Borrowers and lenders in the Low Countries may have benefited from the segmentation of local credit markets as it facilitated the matching of a very heterogeneous supply and demand for loans. On the other hand, in the absence of the kind of information sharing practiced by Parisian notaries, it may have been more difficult to find counterparties. To explore which of these two interpretations holds, we examine the ability of creditors and debtors to adequately price risk. As a first gauge, we simply compare the average interest rate on loans registered by aldermen and notaries to the yield on bonds of the Estates of Holland. As Table 12 shows, the start of the seventeenth century roughly marks the beginning of the downward trend in interest rates, both public and private, due to more certainty and general economic growth along with financial innovations. The rates charged in the private markets followed market developments but they were usually higher than the yield on Holland bonds.19 Table 12The interest rate on loans contracted by aldermen and notaries in six cities in the Low Countries, 1500–1780

Download

Copyright Disclaimer:
This site does not store any files on its server. We only index and link to content provided by other sites. Please contact the content providers to delete copyright contents if any and email us, we'll remove relevant links or contents immediately.