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Prometheus ShackledGoldsmith Banks and England's Financial Revolution after 1700$
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Peter Temin and Hans-Joachim Voth

Print publication date: 2013

Print ISBN-13: 9780199944279

Published to Oxford Scholarship Online: January 2013

DOI: 10.1093/acprof:oso/9780199944279.001.0001

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Borrowers, Investors, and Usury Laws

Borrowers, Investors, and Usury Laws

(p.73) 4 Borrowers, Investors, and Usury Laws
Prometheus Shackled

Peter Temin

Hans-Joachim Voth

Oxford University Press

The English law set a maximum interest rate on loans. To trace the regulation's effect, this chapter examines the tightening of the usury laws in 1714, when the maximum permissible rate was reduced from 6 to 5 percent. The micro data, derived from the bank archives of several goldsmith banks, suggest that only the most well-connected and rich clients retained access to borrowing; the importance of collateral increased. As a result, the efficiency of the English financial system declined. At the same time, the government had an unfair advantage in competing for savings, as reflected in low borrowing rates.

Keywords:   usury laws, loan pricing, collateral, borrowing, lending, risk, social structure, re-feudalization of lending

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