Merchants Votes Credit System

Shanxi bill firm is a currency and credit organization originated in the 1920s, whose major business is to exchange and deposit bills. This kind of bill firm was initially created by pigment businessmen in Pingyao, Shanxi province, then it got imitated by businessmen in the neighborhood, and finally it was dominated by local business association. From its beginning to end, Shanxi bill firm went through a history of more than 100 years, and its business network spread all over the country and even abroad. Its business was both connected with the mass life and the running of the empire and it even functioned as the imperial treasury in Qing dynasty. Therefore, it is both of historical and practical implications to probe into the credit system of Shanxi bill firm.This dissertation firstly analyzes the characteristics of credit and the components and historical evolution of credit system. On the basis of that it classifies all kinds of credit systems that have been created in the long-lasting practice of business, and then discusses the reason and logic of the birth of bill credit systems. It also examines the credit system of Shanxi bill firm in the progressing of social institutions, so as to analyze the economic effects the bill credit systems have in different institutions, formal or informal. This dissertation holds that the efficiency of the credit system of Shanxi bill firm determines its fate. An efficient credit system can help the bill firm accumulate social capital and reduce the cost of transact, and also help the Shanxi businessmen group become the most competitive group in late Qing dynasty. The efficiency of credit system is determined by the self-constraint of credit subjects and the external restraint of social credit environment.After reviewing the history of Shanxi bill firm, this dissertation also put all financial credit systems in different times and places together and compares them, in order to grasp the distinctive characteristics and features of the credit system of Shanxi bill firm. This dissertation holds that the main characteristics of the credit system of Shanxi bill firm are fivefold:belief in honesty; local human resource; incentive mechanism of holding stocks; trust in government and repeated game theory. All in all, Shanxi bill firm is a kind of financial organization born in Chinese society. It is a higher form of commerce capital and its nature is pre-capitalist. Because it is connected with productive relations of petty farmer economy and family handicraft, it fails to combine itself with modern industry. The credit exchanges of bill firm are mainly restrained by informal constraints, and its credit system is built in a transitional process from personal relationship to impersonal relationship. Therefore, in spite of some technical conditions, Shanxi bill firm fail to transit from a traditional financial organization to a modern one, due to the restraint of social credit environment. Bill firms cannot be regarded as equal to modern banks, and the agency system implemented in bill firms cannot be regarded as equal to the two separate ownerships system in modern joint-stock companies either.Finally, this dissertation elaborates the historical meaning of the credit system of Shanxi bill firm and its implication to the construction of modern financial system of intermediary credit, in terms of the inner structure of Shanxi bill firm and its external formal institution and its credit culture, on the basis of a systematic analysis of the evolution of the credit system of Shanxi bill firm.