Hostname: page-component-cd9895bd7-7cvxr Total loading time: 0 Render date: 2024-12-23T06:22:53.719Z Has data issue: false hasContentIssue false
  • English
  • Français

Alternative finance: a historical perspective

Published online by Cambridge University Press:  16 July 2019

David Chambers ,
Rasheed Saleuddin  and
Craig Mcmahon
David Chambers*
Affiliation:
Judge Business School, Cambridge University
Rasheed Saleuddin*
Affiliation:
Judge Business School, Cambridge University
Craig Mcmahon*
Affiliation:
Villanova School of Business, Villanova University
*
Dr David Chambers, Cambridge CB2 1AG; email: [email protected].
Craig McMahon, email: [email protected].
Rasheed Saleudddin, email: [email protected].
Get access Rights & Permissions [Opens in a new window]

Abstract

Innovations in the world of alternative finance such as online consumer lending, fund-raising platforms and cryptocurrencies are proceeding apace. In this article, we examine three historical case studies of newly emerged non-bank financial markets and discuss the possible implications for today's alternative finance markets. The first insight is that the private sector can generally be counted on to meet previously unmet needs. Moneylenders filled a gap unaddressed by the banking system of the day. Junior market IPOs provided access to funds for smaller companies that might otherwise have struggled to raise external finance. Private currencies replaced sovereign coins in transactions at various points in history. The second insight, however, is that new financial markets and instruments eventually attract the attention of regulators. Finally, these examples are a warning to industry not to take for granted that an initially laissez-faire regulatory regime precludes a stronger response at some point in the future. In all three cases, tougher regulation – in some cases even to the point of shutting down the products and markets concerned – arrived after long periods of observation and deliberation by the state.

Keywords

alternative financefinancial innovationIPOsmoneylendingprivate currency

JEL classification

N24: Europe: 1913– N40: General, International, or Comparative N20: General, International, or Comparative N23: Europe: Pre-1913
Type
The past mirror: notes, surveys, debates
Information
Financial History Review , Volume 26 , Issue 2 , August 2019 , pp. 109 - 126
Copyright
Copyright © European Association for Banking and Financial History e.V. 2019 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

We are grateful for suggestions from Raghu Rau, Carsten Burhop, Duncan Needham, Alain Naef, Seung Woo Kim, one anonymous referee and participants at the 2017 Economic and Business History Society annual conference, 2017 Association of Business Historians annual conference and seminars at the University of Cambridge.

References

Official publications

Parliamentary Debates (Hansard).Google Scholar
Report from the Select Committee on Money Lending, 1897 (364).Google Scholar
Report from the Select Committee on Money Lending, 1898 (260).Google Scholar
The Moneylenders Act 1900: 63 & 64 Vic. c. 51.Google Scholar
The Moneylenders Act 1911: 1 & 2 Geo. 5 c. 51.Google Scholar
Report from the Joint Select Committee of the House of Lords and the House of Commons on the Moneylenders Bill, 1925 (153).Google Scholar
The Moneylenders Act 1927: 17 & 18 Geo. 5 c. 21.Google Scholar
Consumer Credit, Report of the Committee, 1971 (4596).Google Scholar
The Consumer Credit Act 1974, c. 39.Google Scholar
The Moneylenders’ Federation Manual and Directory for the Year 1913, General collection PP2501, The British Library.Google Scholar

References

Burhop, C., Chambers, D. and Cheffins, B. (2014). Regulating IPOs: evidence from going public in London, 1900–1913. Explorations in Economic History, 51, pp. 60–76.Google Scholar
Chambers, D. (2010). Going public in interwar Britain. Financial History Review, 17(1), pp. 51–71.Google Scholar
Chambers, D. and Dimson, E. (2009). IPO underpricing over the very long-run. Journal of Finance, 64(3), pp. 1407–43.Google Scholar
Cipolla, C. M. (1956). Money, Prices, and Civilization in the Mediterranean World, Fifth to Seventeenth Century. Princeton, NJ: Princeton University Press.Google Scholar
Collard, C. (1912). The Money-Lenders Acts, 1900–1911. London: Butterworth.Google Scholar
Farrow, T. (1895). The Money-Lender Unmasked. London: Roxburghe Press.Google Scholar
Falkner, R. P. (1901). The private issue of token coins. Political Science Quarterly, 16(2), pp. 303–27.Google Scholar
Gerakos, J., Lang, M. and Maffett, M. (2013). Post-listing performance and private sector regulation: the experience of London's alternative investment market. Journal of Accounting and Economics, 56(2), pp.189–215.Google Scholar
Gilbert, E. and Helleiner, E. (1999). Nation States and Money: The Past, Present and Future of National Currencies. London: Routledge.Google Scholar
Goetzmann, W. N. (2016). Money Changes Everything: How Finance Made Civilization Possible. Princeton: Princeton University Press.Google Scholar
Gompers, P. A. and Lerner, J. (2003). The really long-run performance of IPOs: the pre-NASDAQ evidence. Journal of Finance, 58, pp. 1355–92.Google Scholar
Horne, O. (1947). A History of Savings Banks. London: Oxford University Press.Google Scholar
Hughes, P. L. and Larkin, J. F. (1973). Stuart Royal Proclamations. Oxford: Clarendon Press.Google Scholar
Klein, B. (1974). The competitive supply of money. Journal of Money, Credit and Banking, 6(4), pp. 423–53.Google Scholar
Kuroda, A. (2000). Another monetary economy: the case of traditional China. In Latham, A. and Kawkatsu, H. (eds.), Asia Pacific Dynamism 1550–2000. London: Routledge.Google Scholar
Kuroda, A. (2005). Copper coins chosen and silver differentiated: another aspect of the ‘silver century’ in East Asia. Acta Asiatica, 88, pp. 65–86.Google Scholar
Kuroda, A. (2006). Too commercialized to synchronize currencies. Paper presented at the fourteenth International Economic History Congress, Helsinki 2006.Google Scholar
Lloyd's Weekly, ‘Interest at 400 per cent’, 1 July 1900.Google Scholar
Martin, F. (2013). Money: The Unauthorized Biography – From Coinage to Cryptocurrencies. New York: Vintage Books.Google Scholar
Michie, R. (1999). The London Stock Exchange: A History. Oxford: Oxford University Press.Google Scholar
Muldrew, C. (2001). ‘Hard food for Midas’: cash and its social value in early modern England. Past & Present, 170, pp. 78–120.Google Scholar
Paleari, S., Piazzalunga, D., Signori, A., Trabucchi, F. and Vismara, S. (2014). Academic EurIPO FactBook 2014. North Charleston, NC: CreateSpace Independent Publishing.Google Scholar
Peck, C. W. (ed.) (1960). English Copper: Tin and Bronze Coins in the British Museum, 1558–1958. London: Trustees of the British Museum.Google Scholar
Rajan, R. G. and Zingales, L. (2003). The great reversals: the politics of financial development in the twentieth century. Journal of Financial Economics, 69(1), pp. 5–50.Google Scholar
Ruding, R. (1840). Annals of the Coinage of Great Britain and Its Dependencies, vol. 1. London: John Hearne.Google Scholar
Sargent, T. and Velde, F. (2002). The Big Problem of Small Change. Princeton: Princeton University Press.Google Scholar
Selgin, G. (2003). Steam, hot air, and small change: Matthew Boulton and the reform of Britain's coinage. Economic History Review, 56, pp. 478–509.Google Scholar
Simon, C. J. (1989). The effect of the 1933 Securities Act on investor information and the performance of new issues. American Economic Review, 79(3), pp. 295–318.Google Scholar
Spufford, P. (1988). Money and Its Use in Medieval Europe. Cambridge: Cambridge University Press.Google Scholar
Timberlake, R. H. (1981). The significance of unaccounted currencies. Journal of Economic History, 41(4), pp. 853–66.Google Scholar
Vismara, S., Paleari, S. and Ritter, J. R. (2012). Europe's second markets for small companies. European Financial Management, 18(3), pp. 352–88.Google Scholar
Von Glahn, R. (1996). Fountain of Fortune: Money and Monetary Policy in China, 1000–1700. Berkeley: University of California Press.Google Scholar
Whiting, J. R. S. (1971). Trade Tokens, a Social and Economic History. Newton Abbot: David and Charles.Google Scholar
Xinwei, P. and Kaplan, E. H. (1994). A Monetary History of China. Bellingham, Washington, DC: Western Washington University.Google Scholar