Abstract : Economists agree that after 1700 there was a massive expansion in productivity and output in leading economies. But economists disagree whether finance is a major part of the explanation of this change. This paper sides with Joseph Schumpeter and others, in stressing the importance of finance in economic development. Focusing on the development offinancial institutions in England in the seventeenth and eighteenth centuries, this paper provides a prime facie case for taking the role of finance very seriously, while also pointing to important areas of future research.
