Capital Markets and Colonial Institutions in China

Speaker: Wolfgang Keller

Wolfgang Keller, PhD, Yale University, 1995, is a professor with interests in international trade & investment and economic development. He is one of the leading experts on the international diffusion of technological knowledge. He also has recent work, funded by the National Science Foundation, on comparative development in China and Europe. He has been a resident scholar at the IMF’s Research Department, as well as an advisor at the World Bank, where currently he is working on a project that focuses on the micro structure of foreign direct investment. He is member of both NBER and CEPR, and his research has been published in the American Economic Review, the Journal of Political Economy, as well as other journals.

Abstract: This paper studies the economic consequences of the West’s foray into China after the Opium War (1840-42), when Western institutions were introduced in dozens of cities, known as treaty ports. We show that in cities where there was a Western presence, interest rates declined significantly and capital market performance improved. Both trade institutions centered on Chinese Maritime Customs Service—which was run by Western countries–as well as the legal institutions of the Western courts contributed to the lowering of regional interest rates. We also present evidence that interest rates outside the immediate vicinity of treaty ports declined.


  • Cornell Institute for China Economic Research (CICER)
  • IO Seminar Series