To sustain a protracted war after losing foreign loans and reserves and being sanctioned by the Allies, Japan used its ‘internal financing mechanism’ to gobble up civilian capital through government bonds, unbacked paper currency and interest rate interventions. These tactics aggrandised the size of the monetary base and money supply in Japan’s home islands and colonies, but also created inflationary pressures. To minimise the risk of (hyper)inflation, the government encouraged civilians to save in order to enrich the capital of financial intermediaries who would then absorb the ever-increasing government bonds. The ideal failed as monetary expansion outstripped economic productivity, even though expansionary monetary policy had to be tolerable in order to supply sufficient credit for war production. Imperial Japan’s use of unsecured credit to finance the war, together with its loose exchange controls, led to the diversion of colonial hyperinflationary pressures to the home islands, multiplying the risk of implosion of the ‘internal financing mechanism’. Although draconian currency controls were subsequently introduced, they further disrupted the empire’s economic order, and eventually led to the collapse of the yen bloc.

This article analyses trends in the development of the stock exchange in Jakarta between its stepwise institutionalisation since 1898 and its closure in 1942. The article contributes to literature on the significance of stock markets in the process of mobilising external capital for investment by private enterprise in emerging economies. It finds that the brokers participating in the stock exchange traded shares and bonds of companies operating in Indonesia and registered in Indonesia or in the Netherlands. Many of these securities were also traded on the much larger stock exchange in Amsterdam. Although formally independent, both securities markets were integrated. Based on estimates of relatively high market capitalisation during 1901–40, the article concludes that the Jakarta and Amsterdam stock exchanges together contributed significantly to the mobilisation of private investment and the development of private enterprise in Indonesia.

This study examines the role of pawnshops as a risk-coping device in Japan in the early twentieth century, when the poor were very vulnerable to unexpected shocks such as illness. In contrast to European countries, Japanese pawnshops were the primary financial institution for low-income people up to the 1920s. Using data on pawnshop loans for more than 250 municipalities and exploiting the 1918–20 influenza pandemic as a natural experiment, we find that the adverse health shock increased the total amount of loans from pawnshops. This is because those who regularly relied on pawnshops borrowed more money from them than usual, and not because the number of people who used pawnshops increased. Our estimation results indicate that pawnshop loan amounts increased by approximately 7–10 percent due to the pandemic. These findings suggest that pawnshop loans were widely used as a risk-coping strategy.

Offshore financial centres have attracted considerable critical attention over the past few decades as havens for lightly taxed funds that circulate outside the regulatory oversight of major financial centres. This article addresses the emergence of an offshore market in US dollars in Singapore from the late 1960s using a range of archival sources to identify the motivations of the host, participant banks and regional rivals. The development of the Asia dollar market is particularly striking because Singapore was not the most likely venue for an Asian offshore financial centre. The main regional financial centre was Hong Kong, but the Hong Kong authorities made a deliberate choice not to host an offshore market in Hong Kong, a decision that was initially supported both by the state and by incumbent banks, although the banks later changed their view as the Singapore market grew. This case thus opens up discussion of the influence market actors exert over regulators when they are engaged in regulatory arbitrage as well as regulatory competition between states. Evidence is also presented about the efforts of the Bank for International Settlements to encourage greater transparency in offshore financial centres in the 1980s.

This article studies how the emergence of new political elites and changes in land tenure relationships shaped the socio-economic profile of local credit markets in the Ottoman Balkans between the late seventeenth and early nineteenth centuries. By using probate inventories and court records for the cities of Salonika (including Karaferye), Vidin and Ruse, I compare how the expansion of tax-farming institutions and the concentration of land ownership influenced the social characteristics of lending activities. I find that, in spite of institutional and political similarities, the evolution of local credit markets did not follow a homogeneous pattern. Contrary to the consensus view in the existing literature, local political and military elites, which most tax farmers and large landowners belonged to, did not play a dominant role as moneylenders. Civilians (such as merchants and artisans) together with other social groups, including janissaries and religious functionaries, provided the bulk of informal credit to local communities (including elites) in the three urban areas.

An economic setting of ancient Jewish law is analyzed and reinterpreted in light of a modern formal financial model. Certain real estate transactions in ancient Israel, as stipulated in the Bible, involved embedded financial options that seem to have been overlooked by the commentators. This article interprets, utilizing modern financial theory, the biblical text and sheds light on a phrase used in stipulating these rules that has puzzled some commentators. The option's value and the complexity of the pricing system that would have been needed in order to capture true market prices of these assets are demonstrated.

Was nineteenth-century Japan an example of finance-led growth? Using a new panel data set of firms from the Meiji period (1868–1912), this article tests whether financial sector development influenced extensive firm activity across industries and locations. Results from a two-stage least squares first difference model suggest that financial intermediation is associated with additional net firm establishment, particularly in light manufacturing sectors like textiles. The overall effect is muted in the latter part of the period and among peripheral regions, which may underscore the respective roles of institutions and agglomeration economies in later stages of development.