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Multiple payment systems in globalizing economies

Economists and economic historians are discovering the workings of multiple payment systems that consist of formal as well as informal instruments and methods of payment. Individuals and businesses in the past often relied on informal payment systems even though there was no shortage of cash, credit, or banks. Informal payment systems developed to reflect local circumstances and hence were deeply embedded in economic, social, and cultural considerations. The consensus amongst economic historians is that the role of such informal payment systems was only supplementary or subsidiary to formal payment systems consisting of banks. When local economies connected to world trade from the nineteenth century onwards, only a marginal role remained for informal payment systems.

This view on financial history has recently been challenged, however, by studies of Asian and African economies. These showed that communities continued to rely on indigenous informal payment systems long after the introduction of European or colonial banking systems. They also showed that in many regions indigenous informal methods and formal banking organizations formed multiple payment systems. Importantly, the survival of many local economies relied on the continued working of informal payment systems that offered shelter from the waves of globalization. Development economists have shown similar findings for present-day developing economies.

Although economic historians are starting to better understand informal payment systems and their interplay with formal payment systems, our understanding of the vital role of informal payment systems in economic development remains limited. There has been little empirical research documenting the importance of multiple payment systems as local communities connected to the globalizing world economy. Insight about the role of large merchants or proto-bankers, who provided a buffer to communities by intermediating between informal and formal payment methods, remains even more limited.

This session draws on cases from Asia (India, Japan, Java), Africa (Senegal), and Europe (England, Italy, the Netherlands, Wales) to unravel the importance of multiple payment systems for economic development from a global, historical perspective. To learn from the similarities and differences of these examples, each case is analyzed with a set of identical questions. These include: To what extent were formal and informal payment systems complementary? Would formal payment systems such as banks have achieved their dominant position in local economies in the absence of well-functioning informal payment systems? Did informal payment systems offer a stable social and economic base to communities drawn into the world economy?

The session includes the following scholars and papers:
1. Alberto Feenstra, ‘On India’s demand. The Dutch East India Company’s response to local currency preferences in eighteenth-century Java’.
2. Keiichiro Kato, ‘The Development of the Bill Remittance with no legal basis in the Nineteenth Century: The Case of Salt Market in Japan’.
3. Masato Shizume, ‘Commodity flows and the payment system in Japan during the Edo Era’.
4. Takeshi Nishimura, ‘The Development of the Local Payment Institutions under the Central Banking System in the British India during the 1920s’.
5. Christiaan van Bochove, ‘Complimentary payment systems in the Dutch Republic’.
6. Toyomu Masaki, Exact title as yet unknown, but the paper will be about Senegal.
7. Mina Ishizu, ‘A nexus of payment systems in England and Wales’.
8. Mauro Carboni, ‘Informal credit networks in pre modern Italy’.
9. Kaoru Sugihara, Exact title as yet unknown, but the paper will have a global history perspective.
10. Ryota Ishikawa, Exact title as yet unknown, but the paper will focus on Korea.


  • Mina Ishizu, London School of Economics,,
  • Takeshi Nishimura, Kansai University,,
  • Christiaan van Bochove, Radboud University Nijmegen,,

Session members

  • Alberto Feenstra, University of Amsterdam,
  • Keiichiro Kato, University of Marketing and Distribution Sciences, Japan,
  • Masato Shizume, Waseda University,
  • Takeshi Nishimura, Kansai University,
  • Christiaan van Bochove, Radboud University Nijmegen,
  • Toyomu Masaki, Kanazawa University,
  • Mina Ishizu, London School of Economics,
  • Mauro Carboni, University of Bologna,
  • Kaoru Sugihara, National Graduate Institute for Policy Studies, Japan,
  • Ryota Ishikawa, Ritsumeikan University,

Proposed discussant(s)

  • Pat Hudson, Cardiff University,
  • Mark Mezler, University of Texas at Austin,