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Financing Long-Distance Trade: The Joint Liability Rule and Bills of Exchange in Eighteenth-Century France

Published online by Cambridge University Press:  27 August 2015

Veronica Aoki Santarosa
Veronica Aoki Santarosa*
Affiliation:
Veronica Aoki Santarosa is Assistant Professor of Law, University of Michigan Law School, 625 S. State St., Ann Arbor, MI 48109, USA. E-mail: aokisan@umich.edu.
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Abstract

Over time, international trade expanded beyond the reach of an individual's personal networks. How was long-distance trade among strangers financed without using banks? I argue that the joint liability rule enabled the medieval bill of exchange to become a major form of payment and credit in the early modern period which in turn supported an unparalleled expansion of trade. This article empirically examines the role that joint liability played in ameliorating fundamental information problems in long-distance trade finance.

Type
Articles
Information
The Journal of Economic History , Volume 75 , Issue 3 , September 2015 , pp. 690 - 719
Copyright
Copyright © The Economic History Association 2015 

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Footnotes

The author wishes to thank Timothy Guinnane, Naomi Lamoreaux, Francesca Trivellato, and Christopher Udry for their invaluable advice, support, and encouragement. I am also grateful to Arnaud Bartolomei, Charles Calomiris, Ben Chabot, Nathalie Cointin, Camilo Dominguez, James Fenske, Marc Flandreau, Amanda Gregg, Gary Gorton, Federico Gutierrez, Hunter Harris, Benjamin A. Hicklin, Philip Hoffman, Claire Lemercier, Lucas Maestri, Dan Markovits, Richard Mansfield, Larry Neal, Muthoni Ngatia, Florian Ploeckl, Ben Polak, Jean-Laurent Rosenthal, Francois Velde, David Wallmann, Eugene White, Isaiah Wilner, and seminar participants at the University of Michigan Law School for helpful comments. The archival research was made possible by the generous support of the Economic History Association Exploratory Grant and of the Yale Growth Center travel grant. All remaining errors are my own.

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