Chinese Capital Markets: The Importance of History for Modern Development

The historical determinants of modern economic development have been widely studied since the seminal work of Engerman and Sokoloff (1997, 2002) and Acemoglu et al. (2001, 2002). The literature is largely based on the former European colonies, especially in Africa. Notwithstanding China’s long and rich history, its long-term effect on modern day development, particularly financial development, remains under-researched. The shocks experienced by China provide important settings for future research in that many of them were sufficiently severe and traumatic for their effects to be detectable today and for them to have an effect on the development of the country even now.