The Art of Lending in the Pampas: Commercial Credit and Financial Intermediation in Argentina, 1900–1930

Abstract

Intermediation has been largely neglected in Latin American economic and business historiography. This study focuses on financial intermediation and on the links between the banking system and the commercial sector during Argentina’s export boom in the first few decades of the twentieth century. To that end, it shows how rural merchants served as financial intermediaries in the Pampas by examining the ways in which they provided short-term credit. The risks associated with lending activities and information asymmetries were two of the main reasons that drove banks and large firms to rely on local merchants as their agents or intermediaries in Argentina’s rural areas. Business records from rural merchants, notaries’ archives, and court files made it possible to conduct this empirical study of the historical nature of commercial credit intermediation in Argentina. The research is based on major advances in the theoretical understanding of credit markets and intermediation that have emphasized the problems of imperfect information and enforcement.