Deriving the Railway Mania

Research output: Contribution to journalArticle

3 Citations (Scopus)
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Abstract

This article argues that the promotion boom which occurred in the railway industry during the mid 1840s was amplified by the issue of derivative-like assets, which let investors take highly leveraged positions in the shares of new railway companies. The partially paid shares which the new railway companies issued allowed investors to obtain exposure to an asset by paying only a small initial deposit. The consequence of this arrangement was that investor returns were substantially amplified, and many schemes could be financed simultaneously. However, when investors were required to make further payments it put a negative downward pressure on prices.
Original languageEnglish
Pages (from-to)1-27
Number of pages27
JournalFinancial History Review
Volume20
Issue number1
Early online date30 Jan 2013
DOIs
Publication statusPublished - 01 Apr 2013

ASJC Scopus subject areas

  • Finance
  • History

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