For a small country, Switzerland punches above its weight in banking. This has largely been attributed to bank secrecy rules that make Swiss banks particularly useful to some. Over the past century, the country’s banking sector has been associated with secrecy, accused of facilitating tax evasion and other crimes. While a professional standard in banking…
Britain’s ‘Financial Revolution’ is usually best known for its fiscal and market effects. However, it also coincided with changing opinions towards consumer credit. By the early 18th century, borrowing and lending was accepted as a fact of life that was best tolerated rather than regulated out of existence. One attempt at improving the terms upon…
In 1995, the French government chose to rescue a bank at a cost of $35 billion which had secretly and illegally acquired another firm earlier that decade without regulators noticing. The bank falsified financial statements and had been drifting towards riskier activities for years. Making this story even more surprising was that all this illegal…
In search of higher returns elsewhere, European investors in the 19th century increasingly coveted the bonds of South American borrowers. In Argentina, foreign money helped finance national improvements and government deficits. Arranging much of this financing was one of the oldest London merchant banks, Barings Brothers & Co. When the boom years ended and the…
While credit may hardly be considered unavailable to the poor in wealthy countries today, it’s easy to think it only became so accessible in recent times. In truth, though there will generally be more eager lenders to the rich than to the poor, and while the forms of credit available to the latter have changed,…
Leveraged buyouts, the acquisition of companies where the purchase price is paid primarily by borrowing, became increasingly common in the 1980s. Very often, existing management teams are invited to participate in a leveraged buyout by the acquirer. Occasionally, it is the management team themselves who initiate the transaction and in this variation the arrangement is…
London developed into a financial center in the 17th and 18th centuries. Sir Thomas Gresham, a 16th century merchant and royal financial agent, had some part in making this so. His leading role in establishing the Royal Exchange is well known and lends evidence to this view but that was just a part of his…
Over the last half century, regulation of banks has generally diminished as governments have shed the controls implemented during the Great Depression. In the United States, as elsewhere, banking used to be a very staid business with its workings dictated more often by regulation than by competitive dynamics. Indeed, for decades, the interest rates paid…
While they had existed for centuries before, it was during the 19th century that access to banks was extended to virtually all classes. In Europe and America, new types of banks were formed, including credit unions, that sought to provide dependable financial services to ordinary people. The first of these credit unions were formed in…
Whether usury laws stunted the growth of finance, especially in early modern Europe, is a question that causes much disagreement. The degree of enforcement of these laws may have had some impact on the level of financial development in different parts of Europe but it would be difficult to argue that usury laws stifled all…
