Companies conducting an initial public offering of their shares are often newer and less likely to be profitable, or at least consistently profitable, than long standing companies. There may also be less information available about them. So, arriving at an appropriate price for these shares and buying them is riskier than doing the same…
This is the second in a two-part post. The first covered the origins of Chile’s Caja de Crédito Hipotecario, a state-owned mortgage bank that was one of a handful of financial institutions originating in a wave of bank formation in 1850s and 1860s Chile. This post covers the recovery from a mortgage crisis in…
Rising property values can entice mortgage lenders and the availability of credit for real estate investments can fuel further property appreciation. This has often caused problems. However, the absence of mortgage financing is at least equally problematic as it deprives property owners, or prospective owners, of the chance to undertake improvements to property and this…
The Netherlands, and Amsterdam specifically, was the financial center of Europe in the 17th century. Yet, its most well-known banking family only emerged and reached their height in importance a century later. They were not Dutch, but Netherlands-born decedents of émigré Scots originally drawn to Rotterdam and not Amsterdam. In any case, their bank reflected…
A century before the advent of the Medici, Italian merchants and bankers had significance far beyond Italy. They carried out much of the trade between northern and southern Europe, like the import of Mediterranean luxuries and export of wool in England. Italian bankers also financed this private trade as well as the borrowing of English…
In 1929, a stock market crash ended the boom of the late-1920s. The Great Depression took years longer to set in though; part of the reason is that the bank failures that characterized that period took place after late-1930, more than twelve months after the stock market crash. There would be further waves of…
London’s financial community was involved in the Atlantic slave trade and slavery in the West Indies nearly from their start. Its involvement lasted until the day slavery was abolished in the British Empire in 1833. At the time of abolition, it was decided that slaveholders, and indirectly those who had financed them, would be…
Consumer credit scoring did not arrive quickly even after credit reporting bureaus for commercial firms began to sprout up. In the United States, more than a century divided these moments. Unsurprisingly, to develop consumer credit scores, large volumes of consumer credit data needed to be collected, and this wasn’t feasible until mass consumerism and…
The role of savings in an economy is crucial. Savers’ surpluses fund investment elsewhere in an economy. In a sort of ‘Robinson Crusoe’ economy, with only one person, this link is obvious and the single actor must save, put off immediate consumption, if he is going to accumulate a stock of capital that might…
Miners and ranchers settled the western United States in the mid-to-late 19th century. As the population grew, businesses were formed to serve the people and industries of these territories and though core activities like mining remained crucial, the economy grew and diversified somewhat. Once the economy developed enough, the need for credit became too…
