Simon Ville and Grant Fleming, Financial intermediaries and the design of loan contracts within the Australasian pastoral sector before the Second World War
This paper examines the pooling and separating contracts designed by Australasian financial intermediaries in the late nineteenth and early twentieth centuries. We show that, after an initial screening process, these agents altered interest rates and collateral requirements to separate out risk types to reveal additional information on borrowers. In multi-period contracts, agents opted for flexible contract structures which permitted changes in individual or community-wide circumstances.
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