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Securities trading in an emerging market: Indonesia, 1890s–1940s

Published online by Cambridge University Press:  06 September 2022

Pierre van der Eng Open the ORCID record for Pierre van der Eng [Opens in a new window]
Pierre van der Eng*
Affiliation:
The Australian National University
*
Pierre van der Eng, Research School of Management, ANU College of Business and Economics, The Australian National University, 26 Kingsley Street, CanberraACT2601, Australia; email: pierre.vandereng@anu.edu.au.
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Abstract

This article analyses trends in the development of the stock exchange in Jakarta between its stepwise institutionalisation since 1898 and its closure in 1942. The article contributes to literature on the significance of stock markets in the process of mobilising external capital for investment by private enterprise in emerging economies. It finds that the brokers participating in the stock exchange traded shares and bonds of companies operating in Indonesia and registered in Indonesia or in the Netherlands. Many of these securities were also traded on the much larger stock exchange in Amsterdam. Although formally independent, both securities markets were integrated. Based on estimates of relatively high market capitalisation during 1901–40, the article concludes that the Jakarta and Amsterdam stock exchanges together contributed significantly to the mobilisation of private investment and the development of private enterprise in Indonesia.

Keywords

stock exchangesecuritiescapital marketinstitutional developmentIndonesia

JEL classification

N25: Asia including Middle East G32: Financing Policy • Financial Risk and Risk Management • Capital and Ownership Structure • Value of Firms • Goodwill G23: Non-bank Financial Institutions • Financial Instruments • Institutional Investors
Type
Article
Information
Financial History Review , Volume 29 , Issue 2 , August 2022 , pp. 219 - 246
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Copyright
Copyright © The Author(s), 2022. Published by Cambridge University Press on behalf of the European Association for Banking and Financial History

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Footnotes

I would like to thank the Editor, two anonymous referees, Grant Fleming and Catherine Schenk for useful comments. I also thank Philip Fliers, Joost Dankers and Abe de Jong for making some of their research data available to me.

References

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