| Abstract |
This article analyses private credit operations in Amsterdam in the seventeenth
century to explain the absence of deposit banks. The financial system was highly
segmented and a combination of declining business margins and narrow interest rate
spreads cut the scope for deposit taking. Moreover, merchants had easy access to
credit in the form of short-term loans which could be easily rolled over, or replaced at
will. This technique worked well because a market developed providing key functions
to control risk and price loans accordingly.
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