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The moral making of markets


The emergence of a market for unsecured personal loans dominated by commercial banks is the result of major debates and conflicts which took place in the first half of the 20th century, around the regulation of what was known at the time as the small loan business. First of all, unsecured loans to individual consumers remained highly illegitimate until the 1940s, and were only offered by unregulated credit agencies, labeled at the time as "loan sharks". Secondly, the idea of providing loans to consumers was completely alien to retail banking up until the 1930s, and only around the middle of this decade did commercial banks start opening Personal Loan Departments, as autonomous financial organizations within their institutions. The first goal of the present article is to describe the various legitimacy struggles, which took place between 1910 and the mid 1940s, and led to the birth of a regulated market of unassigned credit bearing these two features. Our goal is to understand how particular practices and institutions established themselves as the gatekeepers of market legitimacy, and to describe the various legal and status-based struggles which can account for these selection processes. The present research simultaneously argues that these legitimacy divides, necessary to the creation of a moral market, had major stratifying effects, and produced a social, racial and geographic segmentation of borrowers, the consequences of which are, to some extent, still visible today. (First paragraph)


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hal-03393209 , version 1 (21-10-2021)



Simon Bittmann. The moral making of markets: Defining the legitimacy of unsecured lending from 'loan sharks' to commercial banks, 1900-1945. 2016. ⟨hal-03393209⟩
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