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Mortgages for machinery: credit and industrial investment in pre-World War I Brazil

Published online by Cambridge University Press:  08 July 2014

Gustavo S. Cortes ,
Renato L. Marcondes  and
Maria Dolores M. Diaz
Gustavo S. Cortes*
Affiliation:
University of Illinois
Renato L. Marcondes
Affiliation:
University of São Paulo
Maria Dolores M. Diaz
Affiliation:
University of São Paulo
*
Corresponding author: G. S. Cortes, PhD candidate in Economics, University of Illinois at Urbana-Champaign, 214 David Kinley Hall, 1407 W. Gregory Drive, Urbana, IL, USA, [email protected]
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Abstract

How could a primitive credit market finance the early industrialisation of an underdeveloped economy? To answer this question, we use a hand-collected data set of mortgage loans raised by industrial firms in the city of São Paulo during the period 1866-1914. These mortgages were debt obligations collateralised by land, improvements, machinery and equipment. We argue that the mortgage credit market was a key source of funding for early industrial investments in Brazil. We find that industries were mainly funded by non-banking and domestic agents. The empirical evidence suggests that mortgages were an important proxy for industrial investment.

Keywords

mortgage creditindustrialisationfinancial marketsinvestment

JEL classification

N26: Latin America • Caribbean N86: Latin America • Caribbean N66: Latin America • Caribbean
Type
Articles
Information
Financial History Review , Volume 21 , Issue 2 , August 2014 , pp. 191 - 212
Copyright
Copyright © European Association for Banking and Financial History e.V. 2014 

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