Moneylenders and Merchant Bankers in India and Indonesia

Reviews the history of professional large-scale moneylenders in pre-colonial and colonial India and Indonesia. States that today's financial situations, or landscapes, and regional differences are the result of processes in the past transcending national and political levels.

According to current development thinking, market integration and establishment of banks were to supplant moneylenders and limit their activity to business-related or industrial functions and yet there are still many small-scale part-time moneylenders in developing countries.

The historical investigation finds that:

• Large-scale moneylenders were not necessary in a controlled colonial economy because private capital markets were not opened up;
• Liberalisation of the economy coincided with institutionalisation of foreign banks;
• Owners of capital in Indonesia were Chinese and restricted by programs after independence, whereas in India, domestic investment was provided by Indian entrepreneurs who had been traders and intermediaries.