Year: 2007
Type: article
Abstract: Were eighteenth-century financial markets efficient? Neal (1990) shows that the London and Amsterdam markets were integrated. Yet some scholars find that the London capital market was either not integrated across various classes of securities, or was comprised of ignorant investors who were not knowledgeable enough to arbitrage across securities with different maturities, or was even irrational at times. In this article, we demonstrate that these London capital market inefficiencies suggested by previous scholars arise from an incorrect comprehension of the pricing of the financial instrument they use. After examining certain features peculiar to India bonds overlooked by previous authors, we make it clear that the London domestic market was perfectly integrated and that investors were capable of handling and pricing sophisticated options.
Authors: P. N. Marco, C. Vam Malle-Sabouret
Institution: Institut d'Etudes Politiques de Paris
Language: English
Subfield: Finance
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W1926425359