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Editor: Universidad Carlos III de Madrid. Departamento de Historia Económica e Instituciones

Issued date: 2007-10

Serie-No.: Working papers in Economic History07-16

Keywords: Investment Banking , Information Asymmetries , Financial Crises , Sudden-Stops , Economic History

JEL Classification: N13 , N16 , G14 , G15 , G24 , F21 , F34 , F37

Rights: Atribución-NoComercial-SinDerivadas 3.0 España

Abstract:This paper analyses the information structure of European investors on the eveof the Baring crisis in 1890. We argue that financial intermediaries were in aprivileged position by having the monopoly of information. This situation led toconflicting intereThis paper analyses the information structure of European investors on the eveof the Baring crisis in 1890. We argue that financial intermediaries were in aprivileged position by having the monopoly of information. This situation led toconflicting interests because business and proper investors’ advice were notalways compatible, as they are not even today. Even though spreads insecondary market prices between Argentina’s long-term sovereign bonds andU.K. consols remained stable throughout the 1880s, primary market variablessuch as underwriting fees or total amounts of -money left on the table- inArgentina’s Initial Public Offerings reflect the deteriorating macroeconomicsituation of the country. In fact, this paper suggests that lessons from theBaring crisis can be transferred to contemporaneous crises.+-





Author: Flores, Juan-Huitzi

Source: http://e-archivo.uc3m.es


Teaser



Universidad Carlos III de Madrid Repositorio institucional e-Archivo http:--e-archivo.uc3m.es Colecciones multidisciplinares IFCS - Working Papers in Economic History.WH 2007-10 Information asymmetries and financial intermediation during the Baring crisis : 1880-1890 Flores, Juan-Huitzi http:--hdl.handle.net-10016-1066 Descargado de e-Archivo, repositorio institucional de la Universidad Carlos III de Madrid UNIVERSIDAD CARLOS III DE MADRID Working Papers in Economic History October 2007 WP 07-16 Information Asymmetries and Financial Intermediation during the Baring Crisis: 18801890 Juan-Huitzi Flores Abstract This paper analyses the information structure of European investors on the eve of the Baring crisis in 1890.
We argue that financial intermediaries were in a privileged position by having the monopoly of information.
This situation led to conflicting interests because busine ss and proper investors’ advice were not always compatible, as they are not even today.
Even though spreads in secondary market prices between Argentina’s long-term sovereign bonds and U.K.
consols remained stable throughout the 1880s, primary market variables such as underwriting fees or total amounts of “money left on the table” in Argentina’s Initial Public Offerings reflect the deteriorating macroeconomic situation of the country.
In fact, this paper suggests that lessons from the Baring crisis can be transferred to contemporaneous crises. Keywords: Investment Banking; Information Asymmetries; Financial Crises; Sudden-Stops; Economic History JEL Classification: N13, N16, G14, G15, G24, F21, F34, F37 Juan-Huitzi Flores: Departamento de Historia Económica e Instituciones e Instituto Figuerola, Universidad Carlos III de Madrid, C-Madrid 126, 28903 Getafe, Spain Email: jhuitzil@clio.uc3m.es http:--www.uc3m.es-uc3m-dpto-HISEC-profesorado-Personal_Juan_Flores.html UNIVERSIDAD CARLOS III DE MADRID c- Madrid 126 28903 Getafe (Spain)Tel: (34) 91 624 96 37 Site: ht...





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