The Origins of Financial Development: The African Slave Trade and Modern Finance

by Ross Levine

This research will evaluate the impact of the 1400-1900 African slave trade on household and firm financing constraints today. The study of the historical determinants of finance is important both for understanding the evolution of the institutions that shape the operation of financial systems and for providing guidance to current policy analysts and policymakers about key barriers to the development of more efficient financial markets and institutions. The project will exploit cross-country and cross-ethnic group differences in the intensity with which people were enslaved and exported from Africa during the 1400-1900 period to identify the impact of the historic slave trade on modern financial systems. This work will provide evidence on whether the slave trade—which has had an enduring, deleterious effect on social cohesion—continues to harm the operation of credit institutions.