DP10702 | Capital Markets in China and Britain, 18th and 19th Century: Evidence from Grain Prices

Publication Date


JEL Code(s)


Programme Area(s)



Based on the most comprehensive grain prices available, we employ an asset-­- pricing model to estimate consistent interest rates and compare capital market development in Britain and China. Estimated interest rates for Britain were at least 28% lower than for China from 1770 to 1860. Regional capital market integration in the Yangzi Delta comes close to the British Average at distances below 200 kilometers, but at larger distances interest rate correlations in Britain are twice those of the Delta, and three or more times as high as elsewhere in China. Overall, our results suggest capital market divergence at an early date.