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Published November 2006 | public
Journal Article

Historical financing of small- and medium-size enterprises


We focus on the economies of the North Atlantic Core during the 19th and early 20th centuries and find that an impressive variety of local financial institutions emerged to supply the needs of SMEs wherever there was sufficient demand for their services. Although these intermediaries had significant weaknesses, they were able to tap into local information networks and so extend credit to firms that were too young or small to secure funds from large regional or national institutions. In addition, by raising the return to savings for local households, they helped to mobilize significant new resources for economic development.

Additional Information

Copyright © 2006 Elsevier. Received 31 January 2005; accepted 8 May 2006. Available online 10 July 2006. We would like to thank Thorsten Beck, Asli Demirgüç-Kunt, Kenneth Sokoloff, two anonymous referees, and participants in the World Bank Conference on Small and Medium Enterprises for their helpful comments. We are also grateful to our research assistant, Andrea Maestrejuan. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the World Bank, its Executive Directors, or the countries they represent.

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