Early Roman Empire Financial Intermediation

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Financial Intermediation in the Early Roman Empire PETER TEMIN I evaluate the effectiveness of financial markets in the early Roman Empire in this article. I review the theory of financial intermediation to describe a hierarchy of financial sources and survey briefly the history of financial intermediation in eighteenth-century Western Europe to provide a standard against which to evaluate the Roman evidence. I then describe the nature of financial arrangements in the early Roman Empire in terms of this hierarchy. This exercise reveals the extent to which the Roman economy resembled more recent societies and sheds light on the prospects for economic growth in the Roman Empire. I n this article I use a theoretical hierarchy of financial sources to evaluate the effectiveness of the financial markets in the early Roman Empire. The goal of this exercise is two-fold. First, it reveals the extent to which the Roman economy resembled more recent societies. No ancient historian claims that the Romans operated in a twentieth-century mode, but most of the financial institutions that we take for granted today are less than two centuries old. More relevant is how the Roman financial system compares with the advanced agrarian economies of the eighteenth century. Second, this exploration sheds light on the prospects for economic growth in the Roman Empire. Good financial markets and institutions help people who have ideas for production get resources to implement those ideas. Empirical investigations of recent economic growth have exposed a clear connection between financial institutions and economic growth; without these markets and institutions, the prospects for economic progress appear far more limited.1 I argue that the Romans had a sophisticated financial structure, which had the potential to promote growth. Recent archaeological research on various parts of the
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