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Interest Rate Restrictions in a Natural Experiment: Loan Allocation and the Change in the Usury Laws in 1714*


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     We thank the partnership of Hoare's Bank for kindly permitting access to their archives, and Victoria Hutchings and Barbara Sands for help with the ledgers. Seminar participants at the 2005 CEPR-Bank of Italy conference and at the Max-Planck-Institute in Bonn kindly offered advice. Fabio Braggion, Christoph Engel, Yadira Gonzalez de Lara, Martin Hellwig, Colin Mayer and Isabel Schnabel made helpful suggestions. We thank Abhijit Banerjee for inspiring our work on this topic and Andrew Scott as well as two anonymous referees for their comments. Research support by the Leverhulme Trust, by the Centre de Recerca en Economia Internacional (CREI) and CREA is acknowledged.