The Design of Debt Clearing Markets: Clearinghouse Mechanisms in Pre-Industrial Europe

63 Pages Posted: 2 Dec 2012 Last revised: 21 Aug 2014

See all articles by Lars Boerner

Lars Boerner

London School of Economics & Political Science (LSE) - Department of Economic History

John William Hatfield

University of Texas at Austin

Date Written: August 20, 2014

Abstract

We examine the evolution of decentralized clearinghouse mechanisms that were in use throughout Europe from the 13th century to the 18th century; in particular, we explore the clearing of non- or limited-tradable debts like bills of exchange. We construct a theoretical model of these clearinghouse mechanisms, and show that the specific decentralized multilateral clearing algorithms known as rescontre, skontrieren or virement des parties used by merchants were efficient in specific historical contexts. Our analysis contributes to the understanding of both the emergence and evolution of these mechanisms during late medieval and early modern fairs, and their robustness during the 17th and 18th centuries.

Keywords: market design, matching, history of decentralized clearinghouses

JEL Classification: C78, D02, N23

Suggested Citation

Boerner, Lars and Hatfield, John William, The Design of Debt Clearing Markets: Clearinghouse Mechanisms in Pre-Industrial Europe (August 20, 2014). Available at SSRN: https://ssrn.com/abstract=2183385 or http://dx.doi.org/10.2139/ssrn.2183385

Lars Boerner (Contact Author)

London School of Economics & Political Science (LSE) - Department of Economic History ( email )

Houghton Street
London WC2A 2AE
United Kingdom

HOME PAGE: http://sites.google.com/site/larsboerner/

John William Hatfield

University of Texas at Austin ( email )

Austin, TX 78712
United States

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