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The monsoon and the market for money in late-colonial India

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  • Roy, Tirthankar

Abstract

Banking experienced large growth in colonial India along with a process of commercialization of agriculture. Yet, the rate of aggregate saving or investment remained low. This article is an attempt to resolve this paradox. It suggests that traditional forms of banking were helped by the formalization of indigenous negotiable instruments, but that transactions between bankers, merchants, and peasants were characterized by a limited use of legal instruments. The limited circulation of bills in this sphere is attributed, among other factors, to high seasonality in the demand for money. Seasonality-induced distortions in the organization of the money market made indigenous banking an unsuitable agent to promote saving and finance industrialization.

Suggested Citation

  • Roy, Tirthankar, 2016. "The monsoon and the market for money in late-colonial India," LSE Research Online Documents on Economics 67418, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:67418
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    1. Jeffrey A. Miron, 1996. "The Economics of Seasonal Cycles," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262133237, December.
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    Cited by:

    1. Iftekhar Iqbal, 2017. "Cooperative credit in colonial Bengal: An exploration in development and decline, 1905–1947," The Indian Economic & Social History Review, , vol. 54(2), pages 221-237, April.

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    More about this item

    JEL classification:

    • N0 - Economic History - - General
    • F3 - International Economics - - International Finance
    • G3 - Financial Economics - - Corporate Finance and Governance

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