Abstract
As reflected in a book by the British economic historian Niall Ferguson [1], the story behind the ascent and decline of nations can also be told as a story of their stock exchanges and financial markets. As competing nations went head to head in the battle for power, the ability to finance wars and buy influence proved to be hugely important: access to capital markets and financial innovations were a key strategic advantage for kings and rulers alike.
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Notes
- 1.
In 1695 the Scottish Parliament founded the Company of Scotland Trading to Africa and the Indies and Scots invested £400,000 in the new-founded company which aimed to establish a colony in the area of today’s Panama. About 1200 people set off to Panama in 1698 but only a quarter returned. The failed adventure wiped out capital equal to half the gross domestic product of Scotland at that time. The French colonial ambition of that day culminated in the Mississippi Bubble which will be discussed in Sect. 11.4.
- 2.
All figures quoted from Deutsches Aktieninstitut (DAI, 2015).
- 3.
However, for developed markets the relationship between financial development and growth seems to be more nuanced. Beyond a certain threshold, even more credit by banks can be detrimental to economic growth [3].
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Heise, M. (2017). Exchanges: Link to the Real Economy. In: Francioni, R., Schwartz, R. (eds) Equity Markets in Transition. Springer, Cham. https://doi.org/10.1007/978-3-319-45848-9_11
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