Document Type
Article
Publication Date
2016
Abstract
In advanced economies interest rates vary inversely with the borrower's socio-economic status, which itself depends inversely on default risk. These relationships depend on the impartiality of the law. Where the law is markedly biased in favour of certain groups, the latter will pay a surcharge for capital. Legal power, as measured by privileges before the law, thus undermines financial power, the capacity to borrow cheaply. Developing this argument, this paper also tests it through judicial records from Ottoman Istanbul, 1602-1799. Three privileged Ottoman groups—men, Muslims, and titled elites—all paid relatively high interest rates conditional on various loan characteristics.
Recommended Citation
Kuran, T., & Rubin, J. (2016). The financial power of the powerless: Socio-economic status and interest rates under weak rule of law. Economic Journal. http://doi.org/10.1111/ecoj.12389
Peer Reviewed
1
Copyright
Wiley
Comments
This is the accepted version of the following article:
Kuran, T., & Rubin, J. (2016). The financial power of the powerless: Socio-economic status and interest rates under weak rule of law. Economic Journal. http://doi.org/10.1111/ecoj.12389
which will be published in final form at DOI: 10.1111/ecoj.12389. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving.