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Eritrea’s early stages in monetary and banking development

ARNALDO MAURI

Working Paper n. 28.2003 - Ottobre

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Arnaldo Mauri

ERITREA’S EARLY STAGES IN MONETARY AND BANKING DEVELOPMENT

Abstract

Eritrea is listed among those countries of Africa, whose

independence has been lately achieved. Notwithstanding the monetary and banking history of Eritrea goes back to the Italian colonial settlement on the Red Sea shore of 19th century. The paper offers an overview of the early stages of the Colony’s monetary development up to mid-thirties and of the problems met in the substitution of Italian currency for the traditional money. A branch of the Bank of Italy was established in Asmara in 1914 and this event marked the first introduction of banking into the country. The Asmara branch was followed by branch offices of the Italian central bank in the four main centres of the Colony. The Bank of Italy was involved also in commercial banking and fulfilled the functions of banker and fiscal agent for the colonial government as well. Furthermore it worked to promote the creation of local banks and the take-off of the Eritrean banking system. Due attention is given to attempts of the colonial government to develop a suitable agricultural credit system in Eritrea and to the critical issues involved.

Keywords:

Eritrea, Financial Development, African Banking JEL classification: E 42, G 21, N 27.

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1.Introduction

Eritrea has achieved independence in the spring of 1993, following a referendum sponsored by United Nations, and is therefore one of the newest African nations. This country is located in the Horn of Africa and occupies a strategic position along the Red Sea western coast being bordered, on the landside, to the north and west by Sudan, to the south by Ethiopia and to the south-east by Djibouti. Coast line by the Red Sea is 1,151 km. and together with Dahlack Archipelago is 2,234 km. Total land area is 121,143 km sq (a little more than Northern Italy) and the population is estimated approximately 3.5 million. The region, through the centuries, has been settled and controlled by various immigrants and invaders, but the most significant contribution to the rise of the nation as a distinct society and territory was made by the Italian colonization. “Eritrea” is, in fact, the name first given to this country by Italians after the Mare Erythraeum (Red Sea) of the Romans. Eritrean identity and national consciousness, in fact, gradually matured during this era. The main events, which may be adopted as dividing Eritrean monetary and banking history into periods, are six. The first event was the Italian preliminary settling on the coastline at Assab in 1869. The second event was the establishment, in 1914, of a branch of the Bank of Italy in Asmara, marking the advent of banking in Eritrea, at that time the whole country being under Italian colonial rule. The third event was, in 1936, the Italian war against Ethiopia, when Eritrea was elected the main base for launching the invasion into the neighbour country. After the conquest of Ethiopia, a broad colonial banking network, extended to encompass all Italian possessions in the Horn of Africa (Eritrea, Ethiopia and Somalia) and closely linked with the metropolitan financial system, was created (Mauri 1967). By the end of the thirties Eritrea, at that time one of the six provinces of Italian East Africa (Africa Orientale Italiana), was referred among the most industrialised African areas south of Sahara (Infante 1948). The fourth event was the collapse of the Italian colonial power during World War II in 1941, when Eritrea came under British military administration and was ruled as “occupied enemy territory”. The East African shilling was enforced as sole legal-tender money and the Barclays Bank settled in the country with two branch offices (Asmara, June 1941 and Massawa, April 1942). British temporary administration lasted, however, for more than eleven years. The fifth event was, in 1952, the federation of Eritrea, as an autonomous state, with Ethiopia

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under the sovereignty of Ethiopian crown, following a recommendation by the United Nations (Zewde 1991). British bankers left, their business was transferred to the State Bank of Ethiopia and Eritrea was fully included into the Ethiopian monetary and banking system (Caselli and Mauri 1986). After a decade Ethiopia, by unilateral decision, annexed Eritrea as a simple province and that infelicitous move started the thirty-year liberation struggle of the whole Eritrean people. Finally, the sixth event was the achievement of independence by Eritrea in 1993, followed by the birth of an independent Eritrean monetary and banking system.

This paper is designate to present a synthesis of the basic problems and developments of the monetary and credit system of Eritrea during the two first periods of Eritrean banking history. The terminal date of the study is October 1935, when the Italian army started the invasion of Ethiopia. The remainder of the paper is organised as follows. Section 2 deals with the establishment of the Colony of Eritrea by the Italians. Section 3 gives an overview of the monetary setting in Eritrea and the problems involved. Sections 4 and 5 focus on landing of the Bank of Italy in the Colony and on coming into use of banknotes. Sections 6 and 7 describe the emergence and the structures of various types of banks and the following banking crisis. Section 8 concentrates on issues related to agricultural credit such as land tenure, legislation, financial institutions, demand and supply of funds, operations of specialized agricultural lenders. The paper ends with a summary of the findings and some concluding remarks in Section 9.

2. The Colony of Eritrea In 1890 the Italians grouped together various territories along the

Red Sea western coast under their possession into the Colony of Eritrea. Through the centuries Arabs, Portuguese, Turks and Egyptians had ruled this coast, but all attempts to penetrate inland had been unsuccessful because of the harsh nature of the territory and the warlike spirit of the inhabitants.

The Italian settling in this area had begun 1869 with the purchase of a piece of coastline in the Danakil country from a local sultan by the Rubattino steamship company at a price of 6,000 Maria Theresa thalers. This acquisition had been transferred in 1882 by the Compagnia Generale di Navigazione Italiana, set up by a merger of the Rubattino

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with the Florio Company, to the Italian state in order to obtain military protection. Italian troops were landed on the Red Sea shore and, with British consent, in 1885 also took possession of the port of Massawa, following the agreed withdrawal of the Egyptian garrison and the recruitment of the indigenous irregular soldiers previously in the pay of the Khedive.

In the following years the Italians penetrated up to the highland plateau densely populated with the excuse of protecting their possession from the periodic raids. As a third step, the occupation of the north-western territories had been carried out after a series of clashes with the Mahadist forces. Eventually the advance of the Italians towards the South was halted in 1896 at Adwa by Menelek’s Ethiopian army, resulting in the bloodiest battle even fought in all the African colonial wars (Zewde 1991).

Italy, even after the opening of Suez Canal, did not have any real relevant strategic interest to safeguard in this remote African region as, instead, it did later with Libya. Also economic interest in exploiting these territories and in giving a destination to a large flow of emigrants, appeared to be doubtful even in a long term outlook (Rochat 1974). Apparently Italy was drawn into this first unlucky venture, a naïve move in the dramatic scene of the “scramble for Africa”, by the inexperience and the unreasonable ambitions of its political leaders at the time when national unity was still an uneasy target to achieve (Riosa 1998). The Italian settlement in Eritrea was also, to some extent, the result of a subtle two-edged British strategy aiming, on the one hand, to quelling the Mahdi’s Sudan rebellion and, on the other, at containing French expansion towards the upper reaches of the Nile (Labanca 2002).

3. The Monetary Setting The Italian Administration found the monetary situation in Eritrea

to be not unlike that reigning in the neighbouring territories. The Maria Theresa thaler, a silver coin (0.8333 fine) minted in Austria, was widely used for domestic trade as well as for trade with Ethiopia and the opposite side of the Red Sea, even though introduction of this commodity money into territories under Ottoman rule was unlawful. The Maria Theresa thaler was a general purpose full-bodied money, used as means for trade as well as for unilateral payments: tributes, compensations for killing and injury, as pointed out by Grierson (1977),

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and gifts (Drake 1980). According to Pankhurst (1965) and other authors the Austrian coin besides its use as money, i.e. means of payment, standard of value and store of value, also preformed important non-monetary functions: in fact it served as jewel, as a certified source of silver for melting down and even as a measure of weight (28.0668 grams). Inland the colony, exchanges were carried on also by barter or by the use of commodity money. Alongside Maria Theresa thalers various types of primitive money served for payments (Einzig 1966) such as salt bars (amolie), cloth, cattle, cartridges, brass bracelets and glass beads (Alamanni 1891).

The circulation of Egyptian currency was concentrated in the Massawa area, formerly under Egyptian control, where this money had been officially enforced. Indian rupees, brought in from Aden, were known in the Assab area. These foreign coins, after Italian occupation, were easily replaced by Italian currency, but the use of the latter remained limited, for the most part, to the urban centres. The Maria Theresa thaler continued to be the principal medium of exchange in the Colony, but this money was not flanked by fractional coins and therefore small Italian pieces became quite popular among the natives (Carboneri 1912).

From the outset, Italian colonial authorities had regarded the Austrian silver coin with notable disfavour (Pankhurst 1965) but nevertheless they accepted the status quo and, in order not to disturb local trade and the trade with Ethiopia and the countries bordering the Red Sea, rejected the idea of transplanting immediately the metropolitan monetary system into Eritrea (Cora 1913). Maria Theresa thalers in large quantities were therefore imported and stocked for the needs of the colonial government. Given that a 1.5 percent brassage had to be paid to the Austrians for minting the coins, the government of Rome tried to obtain from Vienna, in 1887, the authorization to mint these coins at home, arguing that Maria Theresa thalers were no longer legal tender and the Austrians were minting these coins also for private parties (Tschoegl 2001). The dies were already in Italian hands in the mints of Milan and Venice as heritage of the ceased Habsburgs rule in Lombardy and Venetia (Caroselli 1941). The answer of Vienna being negative however, the Italians, concerned about their relations with such a powerful and touchy neighbour, eventually turned to the idea of minting themselves a new silver coin similar to the Maria Theresa thaler.

An autonomous colonial monetary system, closely tied to the Italian lira, was thus created in 1890. This system was based on the

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tallero eritreo (Eritrean thaler), a coin with 0.800 silver content, flanked by three fractional denominations, also in silver: a four tenths of a tallero (two lire piece), a two tenths (a lira piece) and a one tenth ( 50 cents of lira piece). The coinage act envisaged also two denominations in bronze, but these pieces were never put into circulation since the five and ten cents pieces of lira had already gained acceptance (Rossetti 1914). The Italian mints produced on the whole 200.000 silver coins (600,000 talleri’s worth of lira at the official conversion ratio) between 1890 and 1896 (Tschoegl 2001).

The Eritrean monetary system was tied to the national currency by making the tallero equal to five Italian lire. In this way a difficult monetary situation arose in the Colony. The incomplete silver standard system, based on the Maria Theresa thaler (a full bodied money) was faced by a system, which, although using a token money made of silver (i.e. the tallero eritreo) as monetary unit, was actually based on gold (gold standard)). As a consequence, the exchange rate between the two silver coins was not fixed and linked to the bullion content as one would expect, but was fluctuating over the time following changes in the world demand for silver and in the market price of this metal (Petazzi 1911).

This monetary innovation brought in by the Italians was not a success because the natives could not figure out why the tallero eritreo, similar in appearance to the Maria Theresa thaler, but with slightly lower silver content (0.800 rather than 0.8333), should have an official value much greater. Therefore the tallero eritreo seemed to be a fraud and was referred as the “bad thaler”, opposed. to the “good thaler”, i.e. the Austrian silver coin. Eventually, the failure of the tallero eritreo was recognised by the Italian government, which decided to stop minting this coin in 1896 and to withdraw and melt, in 1898, silver pieces for a total value of 3 million lire.

The serious shortage of Maria Theresa thalers during World War I and the consequent rise in value of these coins suggested Italian government trying another way taking into due account the criticisms on the tallero eritreo. Accordingly, in 1918, a new silver coin was opted for, denominated tallero d’Italia (thaler of Italy), which resembled as closely as possible the Maria Theresa thaler in all its details, including that of being a full bodied money, completely independent of the Italian monetary system (Mariani 1918). The mintage was free, just as with the Maria Theresa thaler, and furthermore its silver content was higher this time ((0.835 fine). The new Italian thalers, like the Austrian coins, were

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entitled to circulate alongside the metropolitan currency, but without a fixed exchange rate. In fact, the value of the new coin, as well as the value of the Maria Theresa thaler, was allowed to fluctuate following the price of silver.

In spite of its beauty and proper requisites, the tallero d’Italia, at first, was not easily accepted by the natives because of their conservatism (it differed in some details crucial for them) and because it could not be used for trade with bordering countries (Pankhurst, 1965). The Italian authorities, from their part, did not persevere in this direction, as they perhaps should have done. In the meantime their views on this matter had changed and the new policy was to encourage the use of metropolitan currency in the Colony. The mint therefore produced only 550,000 pieces of the Italian thaler on the whole (Pollera 1926).

4. The Bank of Italy lands in Eritrea The first bank to be established in Eritrea was a branch of the Bank

of Italy, whose home office was in Rome, but this important event occurred many years after the first Italian settlement in the Horn of Africa and after the founding of the Colony of Eritrea. Appeals and petitions to have banking services in Eritrea made repeatedly both by the Italian and other foreign business communities residing in the Colony were not given due attention in Rome for some decades. In 1885 Hassan Moussa el Akad, an Egyptian businessman, had submitted to the Italian authorities a project for the creation of a bank which would provide both commercial loans and mortgage loans. However the request was turned down by the Italian authorities in order not to create difficulties with the Foreign Office in London since, according to information obtained, the Egyptian banker appeared to be involved in an anti-British movement in his country (Mauri 1967). Having lost this occasion, more than a quarter of a century was to pass before a bank office was established in the colony.

The vacuum due to the absence of institutional sources of credit was filled to some extent by informal finance, namely moneylenders, pawnbrokers and indigenous savings and credit associations (iqqubs and iddirs). Almost no details of the beginnings of these activities both in Eritrea as well as in the neighbour Ethiopia are known (Mauri 1967, Begashaw 1978, Aredo 1993). In Eritrea traders and moneylenders

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granted loans both to Italian settlers and to natives, whilst businessmen resorted to financial services of banks operating outside the Colony, in Italy or in other countries (Santagata 1935).

In these circumstances the Italian Postal Administration played a crucial role, in deposit taking through checking accounts as well as in the payment and money transfer services, but this institution however was not in a position to provide credit. Postal financial services were offered through a network, in continual expansion, which, at the beginning of the 20th century, was served by offices in Asmara, Massawa, Assab, Keren, Adi Keyih, Agordat, Adi Ugri and Segeneyti. The service of payments and money transfer at distance did not only regard Italy and the Italian possessions, but also other European countries and their African and Asian possessions, following international agreements (Mauri 1980). In Eritrea efforts were made to develop the collection of postal savings and the results achieved were encouraging, but regarded the natives to only a small extent. The postal savings passbooks increased in number from 595 at the end of 1886 to 11,933 by the end of the century and 16,309 by 1909 for a total amount of over 7 million lire.

To overcome the shortage of credit and to meet the pressing demand for a supply of a comprehensive range of banking services, the colonial authorities requested, trough the Ministry of Foreign Affairs in Rome (responsible at that time also for colonial affairs) a direct intervention in Eritrea by the Banca d’Italia. The Italian central bank was to be free to effect in the Eritrean Colony all the operations which customarily pertain to banks of issue as well as commerial banking operations. The Bank of Italy, at first, manifested its interest in principle, but added that the implementation of the project would have required a series of procedural steps. Accordingly, in 1906, following proposal by the Board of Directors, a shareholders meeting of the Bank of Italy voted in favour of opening an Eritrean branch and a mission was sent to Asmara to make a feasibility study of the project (Tuccimei 1998). The conclusion, however, was not encouraging.

First of all, there was no evidence of initiatives of this kind by central banks of countries having colonial empires. Secondly, the Eritrean branch to be established would have found difficult to become viable in the space of few years, even if it was to handle the treasury service for the colonial government. Thirdly local authorities appeared to be unable and/or unwilling to grant public contributions to the Bank of Italy branch. Last but not least, there were serious difficulties of legal

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and regulatory nature owing both to the lack of specific provisions regarding banking business within the commercial legislation framework of the Colony and to administrative constraints set up by the Banca d’Italia’s statute and by the rigid regulations drawn up within the bank itself (Tuccimei 1998). In conclusion, conditions in which the Bank of Italy would have been called to operate in Eritrea were entirely and significantly different from those usual in the Italian context. Therefore no wonder that the establishment of a Bank of Italy branch in Asmara remained an issue of studies and discussions for the next few years without any concrete development.

The idea of direct intervention by the Italian central bank fallen through, the colonial authorities turned to private commercial banks and, in 1909, started negotiations with the Banco di Roma. This bank had adopted a policy of expansion of its branch network on the southern and eastern coasts of the Mediterranean and appeared to be interested in establishing branch offices in the Red Sea area as well (de Rosa 1982). The bank’s management, however, concerned about scarcity of local business opportunities, stipulated, as an essential condition, that to the Eritrean branch office should be entrusted the function of fiscal agent of the colonial government. Banco di Roma maintained that, in the absence of public grants, only in handling this service would it achieve a minimum operational size to be fully viable. Unfortunately the Ministry of the Treasury in Rome, when approached on the matter, categorically excluded that this service could be entrusted to a private institution (Mauri 1967).

Given that Italian banks were not interested in settling in the Horn of Africa, a good solution could have been found if the Bank of Abyssinia had been created on Italian initiative, because in this event it would have been permitted to open offices and to operate under conditions of monopoly everywhere in Eritrea. However, the acquisition of the control of the bank by the British from the outset had made this solution unworkable. It was in fact a request by the Bank of Abyssinia to open branch offices in Eritrea in order to develop trade with Ethiopia, which stirred up the Italian government and broke the stalemate (Zervos 1936, Mauri 1967). The Bank of Italy was, accordingly, asked once again, and this time with greater insistence, to change its mind on establishing branches abroad.

The Italian central bank had already granted loans to the government of the Colony for public works and had coordinated a banking consortium to finance the construction of railways in Eritrea.

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The consortium encompassed also other Italian financial institutions. Partners in this venture were: Banco di Napoli, Cassa di Risparmio delle Provincie Lombarde, Banca Commerciale Italiana, Credito Italiano, Società Bancaria Italiana and Banco di Roma (Banca d’Italia 1940). The Bank of Italy, this time, could not refuse the invitation because the legislative obstacles, which formerly had appeared insurmountable, no longer existed.

After Italy had acquired Tripolitania and Cyrenaica, previously under Turkish rule, the problem of colonial credit could no longer be postponed. An ad hoc law in 1911 had authorized the three Italian banks of issue (i.e. Banca d’Italia, Banco di Napoli and Banco di Sicilia) to settle in the colonies with the permission to operate under a special regime, gaining conditions of greater flexibility. Accordingly, the statute and the internal regulations of the Bank of Italy were conveniently amended and obstacles, which had halted in 1906 the Eritrean project, were removed. Under the new legal and regulatory framework the colonial branches of the Italian central bank were allowed to follow procedures and to carry out operations, which were forbidden to the metropolitan branches, provided these new operational rules were more adapted to the economic and social context in the colonies. Therefore, authorisation was given for all kinds of operations of commercial banking (Mauri 1967). Furthermore for the whole range of financial products offered to customers it was permitted to apply contractual terms and interest rates different from those applied domestically and which varied also from territory to territory in the colonial possessions. As a result of this new approach, the first bank to be established in Eritrea was a branch of the Bank of Italy.

A branch office of the Bank of Italy was inaugurated in Asmara on February 2nd, 1914, set up with autonomous capital, and a sub-office was opened, on April 15th of the same year, in Massawa, the main port of the Colony on the Red Sea. Among the instructions issued at the beginning by the General Manager of the Bank of Italy to the Eritrean offices are remembered (Tuccimei 1998):

(a) maintain good working relations with the Bank of Abyssinia of the neighbour country;

(b) facilitate the placing of reliable people in the principal client firms of the bank;

(c) visit periodically the various urban centres of the colony where the bank has actual or potential customers in order to help decisions on times and places for opening successfully new sub-offices.

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Besides these guidelines it should be mentioned that the management of the Italian central bank had in mind the design to transform, in due time, the Eritrean branch into a new independent financial institution of the Colony.

The newly established Banca d’Italia branch rendered important services to the economy. It began operations of commercial banking and fulfilled the functions of banker, fiscal agent and adviser of the colonial government as well. To the Bank was also entrusted the administration of imported Maria Theresa thalers. The Bank of Italy was lending to business against stock-in-trade and against movement of goods. For advances on pledge, initially merchandise had to be stored in the Customs warehouses, but later the Bank opened a bonded warehouse in Massawa. A collateral security margin of 40% was required for advances on commodities (Tuccimei 1998). Among the deposit collecting operations were current accounts, both non-interest bearing and interest bearing (with the rate of 2.5%) and savings deposits at 3% rate. The Bank of Italy also issued certificates of deposits with 3-month, 6-month and one year maturity terms, bearing interest rates of 3%, 3.5% and 4% respectively. The dependence upon the main office in Rome enabled the Banca d’Italia’s Eritrean branch to gain immediately the confidence of customers and provide a full range of services which, at that time, would have been impossible for a local independent credit institution. However the working procedures were perceived as bureaucratic by some customers.

The Eritrean economy experienced a period of considerable growth following, in 1914, the outbreak of World War I. The exports-led economic development required adequate investments in the Colony and a greater supply of credit and banking facilities. The Eritrean branch of the Bank of Italy was flexible enough in operations and increased promptly the supply of credit in response to expanded opportunities for lending. It enlarged its initial branch office network (Asmara and Massawa) with the opening, as from 1917, of sub-offices in two caravan centres (Keren and Adi Keyih) and in Assab, port on the Red Sea in the South of the Colony.

The Bank of Italy in Eritrea was involved in insurance business as well. It performed functions of agent for two outstanding Italian insurance companies: the Istituto Nazionale delle Assicurazioni and the Assicurazioni Generali (Tuccimei 1998).

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5. The Circulation of Banknotes. Very important was the role in the Bank of Italy in promoting the

use of paper money, even bearing in mind that the backwardness of the Colony was certainly not a factor which could help expansion in note circulation. From as early as 1885 there had been the first consignment of notes by Banca Nazionale del Regno d’Italia (which in 1893 would become Banca d’Italia following the merger with other banks) to the Cassa Militare of Massawa for a total of 70,000 lire (Mauri 1967). Military headquarters had, however, informed the Ministry of Treasury that the circulation of the Italian notes was meeting serious difficulties in Eritrea because it was not easy to persuade the natives to accept token money made of paper. The communication had had the effect of bringing about a suspension of the dispatch of notes. This episode is eloquent enough in illustrating how Italy was unprepared to handle colonial affairs when it was driven to this first adventure in the Horn of Africa.

Three years later the Treasury had made a second delivery of banknotes for a total of 600,000 lire. These included Banca Nazionale del Regno d’Italia notes for two thirds of the total and Banco di Napoli notes for one third. The Banco di Napoli notes had been included following complaints of this bank of southern Italy to be discriminated in favour of the Banca Nazionale del Regno d’Italia. The Banco di Napoli notes, however, were returned to Italy few months later by the military headquarters in Massawa, which had pointed out the inopportuneness of increasing heterogeneity of the medium of exchange circulating in the colony and thereby frustrating the efforts made to dispel the diffidence of the natives towards the Italian currency (Mauri 1967). With the passing of time the use of notes had, however, increased to the extent that in 1913, to meet the scarcity of currency, State notes of 5 lire were also put into circulation.

With the establishment of a Bank of Italy branch in Eritrea a further impulse was given to the circulation of notes, mainly after the outbreak of World War I. After 1914 there was fairly steady growth of the total bank notes. The supply of notes, however, was to some extent elastic. That means that the supply of notes expanded and contracted following seasons and the needs of business. At the end of 1921 the virtual circulation of notes in Eritrea reached a total of almost 30 million lire, of which 6 million in state notes and the rest in bank notes of various denominations. These figures did not take account of notes exported

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directly and informally from the Colony (or better of the balance between outflow and inflow of notes outside official channels) and of notes been destroyed.

In subsequent years the diffusion of notes in the Colony increased further, but this phenomenon must be attributed more to immigration from Italy than to a radical change in the habits of natives. Indeed, while the inhabitants of the urban centres proved increasingly disposed to accept payments in this form of money, the rural population showed resistance. This behaviour, however, was not irrational as it might appear. It was not only a matter of confidence in the paper currency, in its exchangeability and in its attitude to preserve the value over time performing the function of an asset, but also a matter of physical conservation. This paper made kind of token money, in fact, did not prove ideal and safe for hoarding, given the primitive living conditions of the Eritrean peasants.

6. The Founding of Eritrean banks.

The Bank of Italy, once settled in Eritrea, worked to promote the creation of new financial institutions and the Asmara branch functioned as a central bank for the colonial financial system as well, when these colonial institutions came into being. It can also be said that one of these institutions, the first to be constituted, was set up in Asmara with the assistance of the Italian central bank itself. The announcement of the founding of the Banca Cooperativa Popolare Eritrea (henceforth referred as BCPE), published in the official gazette of the Colony on March 11th, 1915, stated, in fact, that it was an initiative under the patronage of the Bank of Italy, approved by the colonial government. The “people’s bank” model was opted for with the aim of furthering the co-operative movement in Eritrea and of establishing, alongside the Bank of Italy, which operated much as a commercial bank, a new bank in a certain way complementary (Spagnoli 1938). BPCE was directed, therefore, to address the small business segment of the market, which was almost neglected by the Bank of Italy. The membership fees were to build up the equity capital of the credit co-operative and profits were to be distributed in the form of dividends to members according to the number of shares owned.

BPCE, set up by 312 members who had purchased 6,848 registered shares of 50 lire each, started to do business on June 1st, 1915. The number of shareholders was destined to increase rapidly because,

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according to the statute of the bank, no single shareholder could own more than 100 shares. At the end of 1915 the number of shareholders had increased to 370 and the paid-up capital to 433,050 lire. The success of the business and the high dividends distributed by BPCE brought in other shareholders in the following years to the extent that, at December 31st, 1920, the shareholders numbered 485 and the paid-up capital was 881,650 lire (Mauri 1980).

BPCE’s earning assets consisted to large extent of loans, each of modest amount, granted to a clientele consisting of small traders and craftsmen who were not necessarily shareholders in the bank. The technical form generally adopted was the discount of trade bills, followed by the current account overdraft facilities, often backed up by guarantees, the advances against goods (usually stored in the Bank’s own godown), warehouse receipts and securities Adequate margins against collateral were required. The collateral for secured loans could also be represented by shares of the bank itself. BCPE was collecting funds by means of current accounts, savings deposits and time deposits on which were paid interests at rates considered attractive for savers and integrated these financial resources by turning to the rediscount desk of the Bank of Italy in Asmara branch office (Mondaini 1919).

BCPE’s business grew rapidly during its early years reflecting the economic development of the Colony due chiefly to World War I. In 1916 2,247 bills of exchange were discounted for a total of 5,217,579 lire, but the discounted bills in the following year were 7,211. The operative peak was reached in 1920 with a movement of accounts of 374 million lire and a profit of 681,848 lire.

Different in character from BCPE was the Banca per l’Africa Orientale (henceforth referred as BAO), set up as a joint stock company in Rome on September 7th, 1917 and having its head office in Massawa and a branch office in Mogadishu in Somalia. Both offices were located in port cities and this feature indicates clearly the type of activity to which it intended to pursue. BAO was created on the initiative of the Banca Italiana di Sconto, which in those very years, thanks to a rather imprudent investment policy, had seen a rapid growth which placed it among the major Italian banks. The Banca Italiana di Sconto wished to expand, even indirectly, its business also in the colonies and chose this initiative to achieve its objective.

The Banca Italiana di Sconto was not, however, the largest shareholder in this new African banking venture since it was intended to provide it with funds essentially by means of portfolio rediscount. BAO

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registered capital was a million lire, subdivided into 2,000 shares of 500 lire each and Banca Italiana di Sconto had subscribed only 300 shares. An equal shareholding was held by the Compagnia Mineraria Coloniale, with head office in Tripoli. The major shareholders of BAO were two Italian businessman, both of whom had inside the bank the position of managing director, one resident in Massawa and the other in Mogadishu. The responsibility of the former was limited to Eritrea, while the latter’s regarded Somalia.

BAO opened its doors to the public in April, 1918, offering a wide range of financial services permitted by its statute. As distinct from the former co-operative bank, the new bank dealt mostly with important customers and undertook the financing of international trade. BAO, inspired by the universal banking model adopted in Italy by the Banca Italiana di Sconto, was authorised to be involved in all forms of credit business: short term commercial loans and overdrafts on current accounts, medium and long term credit, trading in equities and holding shares of companies working in different sectors of the economy such as agriculture, industry, transport, mining (Mondaini 1919).

The multifarious activities of BAO leave no doubts that it was able to adapt fully to the business conditions of the colonial economy so as to exploit profitably all the opportunities available. As a consequence BAO was able to make high profits when economic conditions were favourable, but it showed its weakness at the moment when Eritrean economy met the first difficulties on account of its exiguous equity capital and of excessive exposure to risks because of the quality of investments. The insufficiency of the equity capital was recognised by the executive directors and accordingly, in October, 1919, the share capital was doubled and finally, in 1921, elevated to 4 million lire.

7. The Banking Crisis In the early twenties the Eritrean banking system consisted of an

autonomous branch of the Bank of Italy which combined operations pertaining to commercial banks with the activity of central bank and of two private banks. One belonged to the co-operative movement, had a definitely local character and was assisted by the Bank of Italy, while the other, with bias towards foreign trade business, was linked to a large Italian bank. There were in the Colony a total of six bank branch offices

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or sub offices located as follows: two in Asmara, two in Massawa, one in Keren and one in Adi Keyi.

The favourable conditions for Eritrean economic development resulting from the export boom during the war period were, however, only transitory. The impetus of growth did not survive long. Foreign trade declined and the fall in exports was accompanied by a fall in prices of raw materials in international markets. The sharp reduction of demand from abroad threw the economy of the Colony into a serious crisis (Spagnoli 1938). All the principal market oriented productive sectors were hit and all domestic prices, even of imported goods, fell. In particular, there were falls in the prices of silver, and of both urban and rural real estates.

The Bank of Italy branch, thanks to its prudent lending policy, to the proceeds from administering the colonial treasury service and to help from the head office in Rome, succeeded, without serious repercussions, in overcoming the crisis years, although it was obliged to downsizing and to cut costs by shrinking its operational network. The other two banks present in Eritrea suffered much more heavily the depression and dropped in a very difficult situation, for which they themselves, at least in part, were responsible.

As the crisis started, BAO revealed its weakness to the full due to the lack of liquidity and to the poor quality, in terms of credit risk, of its earning assets. On the other hand the co-operative bank, which had followed a more cautious lending policy, committed the imprudence of being too generous in distributing dividends to its shareholders during the prosperous years. The first to succumb was BAO, brought down also by the very serious problems faced in Italy by the Banca Italiana di Sconto, the Italian bank with which was linked. The extraordinary general meeting of the BAO shareholders, held on January 2,1923, deliberated the liquidation of the bank.

BCPE, for its part, succeeded in overcoming the initial difficulties thanks to the Italian central bank’s support, but the situation continued to worsen with the great slump until, in the beginning of 1931, it was on the edge of collapse. The extraordinary shareholders meeting, immediately convened, decided to depreciate the share capital by 75% following a rectification of assets value in the balance sheet. A change in the organizational and financial structure was, as well, opted for in order to provide greater flexibility. As from October, 1932 the co-operative bank took on the new name of Banca del Littorio and its statute was changed, but the transformation did not succeed in putting it

17

on its feet. The newly named bank was short lived. The continuing crisis of the Eritrean economy suggested putting an end to the life of this bank and in March, 1933 was decided the liquidation.

No better fate met the Banca Coloniale di Credito (henceforth referred as BCC), which was established in December, 1923 with a capital of one million lire, divided into 2,000 shares of 500 lire each, on the initiative of the Banca Nazionale di Credito, which had been created in May of the same year in Italy as a successor to the Banca Italiana di Sconto. The Banca Nazionale di Credito had subscribed 90% of the share capital of BCC, while the remaining 200 shares were divided into five equal parts and subscribed by the managing director, who was the BAO liquidator, and by four local businessmen, of whom one was an Eritrean. BCC started to operate the following year with the head office in Asmara and a branch in Massawa, concentrating in particular to operations connected with international trade. In 1925 the capital was doubled to meet the increasing needs due to the growth of business. However in 1930, following an exchange of shares, the bank Credito Italiano got the control over BCC. The new principal shareholder, judging the profitability to be insufficient and the presence in Africa to be non-strategic, in 1932 decided to liquidate BCC.

As a result of the severe banking crisis, in mid-thirties the Eritrean branch of the Bank of Italy was the only financial institution still providing commercial banking services in the Colony of Eritrea. However, in the fall of 1935, just before the outbreak of the war, the financial scene was suddenly changing as two outstanding Italian commercial banks decided to land into the Colony. The Banca Nazionale del Lavoro moved first and decided to open branch offices in Asmara, Massawa and Dekamere. Banco di Roma was second in the scramble for East Africa and opened a branch office in Asmara (de Rosa 1984). In the next years Banco di Roma established in Eritrea two more branch offices (Assab and Massawa), followed by Banco di Napoli with three branch offices (Asmara, Dekamere, Massawa). In 1940 the Eritrean banking network consisted of five institutions: Bank of Italy, Banco di Roma, Banca Nazionale del Lavoro, Banco di Napoli and Cassa di Credito Agrario e Minerario. The first four financial institutions were metropolitan whereas only the fifth was local. These institutions operated a total network of 13 branch offices located in four cities: Asmara, Massawa, Assab and Dekamere.

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8. Agricultural Credit Agricultural credit is an especial topic that needs a separate

approach in a study devoted to analyse the financial system of Eritrea. From the outset, the prospects for development in the Eritrean Colony appeared to be mainly related to agriculture, but this sector was long neglected by the credit system. On many occasions the Italian farmers of the Colony had asked both colonial authorities and the government in Rome, to provide medium and long-term loans, at a concessionary interest rate, devoted to land improvement for agricultural use. The indigenous farmers, in turn, although they had no claim, were in need of small loans to escape from the exorbitant rates charged by local moneylenders.

The banks present in the Colony were not, however, in a position to meet these requests. The difficulties in supplying credit adequate both in quantity and quality to the particular conditions of agriculture were to be found not only in the absence of a specialised financial institution, but also in more profound causes relating to land tenure system in the Colony (Zecarias 1966, Admassie 2000). It was impracticable, in fact, for financial institutions to carry out long-term lending to farmers without receiving a mortgage guarantee as a collateral. In other words the need was felt for a land reform in Eritrea that would provide property titles and demarcate precisely the boundaries of agricultural estates and would replace the indigenous tenure system, a regime based on a diffused uncertain collective property, by a regime cantered on registered individual property (Pollera 1913, Tappi 1926). This reform, apart from the serious technical difficulties and the heavy costs involved, also met obstacles of political nature since there was the not unfounded fear of wounding the susceptibilities of the natives by introducing innovations which would upset their long-established traditions of land tenure (Colucci 1936).

It is not surprising, therefore, that as a direct result of the tangle made up by technical difficulties, budget constraints and political fears, both the government in Rome and the colonial authorities had for many years refrained from taking initiatives in this field giving the impression of remaining absent and insensitive in face of requests raised from

19

several quarters. It was necessary to wait until 1922 before the first law on the matter of agricultural credit for Eritrea was passed. This law provided for the granting of long-term loans to farmers who had already undertaken, or would have undertaken within three years, the reclamation of land for agricultural use. The loans, made directly by the colonial government were repayable in 50 years and the amounts were to be disbursed according to the state of progress of the improvement works. The total amount of money available for lending over a three -year period corresponded to 35 million lire. An interest rate of 2.5% was applied and the State was taking for its account the difference between this rate and the rate to be paid to the Cassa Depositi e Prestiti of Rome from which the funds derived.

In view of the special procedure to be followed for granting loans, which each time required for a single application an authorisation by the Ministry of the Colonies, the category of farms which were eligible for concessionary loans was limited and farms with a cultivable area of less than 3,000 hectares were excluded. The supply of formal credit was therefore denied to small and medium-size farms and, in fact, to all the indigenous farmers. Furthermore, the supply of short-term loans was not contemplated by the law. An attempt to remedy this last shortcoming was made by a decree, dated April 1930, issued by the colonial government of Asmara, which set up in its own offices a service for granting agricultural loans, initially making available a revolving fund of 400,000 lire.

This service was instituted with the aim of granting operation credit (short term) to the farmers who were landowners, concessionaries or tenants. The loans had the technical form of discount of agricultural promissory notes, the term could not exceed 12 months and the amount loaned could not be more than a third of the estimated value of the expected produce. A discount rate of 2.5% was charged and this income served only to cover the non-financial (administrative) costs. The amount of the revolving fund, even after further allocations, remained, however, quite insufficient to satisfy the needs. Loan recoveries were also unable to maintain an adequate inflow of revolving funds. On the other hand, the Colony’s budget did not permit more. It must be added that the disastrous harvest of 1931, caused by an exceptional draught, meant that a large number of farmers was not in a position to repay the money borrowed and it became necessary to remit the debts. As a result the revolving fund was rapidly exhausted (Mauri 1980).

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In these circumstances a project matured of setting up an agricultural credit section within the Eritrean branch of the Bank of Italy. It was felt that this project could represent the best solution in order to channel an adequate flow of funds towards the agricultural sector. The Bank of Italy, no longer restricted by its statute, accepted the proposal at the condition that only operation credit should be granted. The Section was, accordingly, constituted by a decree, dated November, 1932 issued by the Ministry of the Colonies (Tuccimei 1998). The financing was to have been mainly indirect, reaching farmers through associative bodies and in particular through the Consorzio Agricolo Eritreo. The technical forms contemplated were those of discounting agricultural bills and advances on produce, and in this way was given more consideration to the security available with collateral than to the repayment capacity of the farms. The loans were to serve for financing the purchase of physical inputs and for the running of the farms, for product processing and also for the payment of rents and concession fees and for insurance premiums. The term could not exceed one year. Exceptions were made for loans devoted to the purchase of livestock and machinery, for which repayment could extend up to five years (Mauri 1967).

It is worthwhile to note that, for the first time, the needs of the indigenous farmers were taken into account. It was arranged, in fact, that the Consorzio Agricolo Eritreo could grant credit in kind in the form of supplies of seeds, fertilisers, livestock and tools. It was also permitted for the illiterate borrowers to substitute fingerprints for signatures provided the amount of each transaction did not exceed 5,000 lire and that the signatures of two witnesses were added. These supplementary signatures were not, however, a guarantee, but attested simply the presence of witnesses at the moment of drawing up the contract.

Initially, the activity of the agricultural credit section of the Italian central bank branch was only modest for understandable reasons of caution at the take-off stage, but already in the second year there were 92 credit transactions. However, in the following years, both on account of the continuing agricultural crisis and in the absence of radical reforms, the amount of credit granted remained below expectations. Moreover, there remained to be talked the area of land improvement loans, for which Italian legislation contemplated special provisions. It was recognised that the Bank of Italy was not a suitable institution to offer such a form of rural credit, and accordingly, in December, 1932 the

21

Cassa di Credito Agrario (hencefore referred as CCA) was created from the pre-existing autonomous Service of the colonial government.

The seed capital of CCA should have been paid up by the government of the Colony using the limited inflow funds recovered from repayment of the outstanding loans granted by the pre-existing Service of agricultural credit, integrating them with funds coming from other sources. Also contemplated were annual contributions by the colonial government as refund of administrative expenses. CCA was authorised to borrow money from financial intermediaries in the Colony or in Italy. In relation to lending CCA was to grant land improvement loans as well as seasonal and operation credit. The indigenous farmers were penalised since the condition requiring to borrowers valid individual ownership title deeds, land certificates or occupation rights on the land which they cultivated proved to be very restrictive for them, given the local customs on land tenure. Furthermore, even when conditions of eligibility existed, the indigenous farmers were required to get prior authorisation by the colonial government (Mauri 1967).

The land improvement loans could not exceed half the value of the farming land at the end of improvement works in the case of borrowers being landowners, while for the concession holders the ceiling was represented by the estimated cost of improvement works already carried out and of those of the works included in the project still to be initiated. In all cases a first lien of mortgage was contemplated for these loans. Le length of the loans varied according to their scope. Loans for crops having a growth cycle of several years had a maximum duration of 15 years, while for the purchase of farming land up to 30 was possible. Interest rates were to be fixed annually by the Governor of the Colony on the advice of the Board of Directors of CCA.

The scarcity of funds and difficulties of organisational nature delayed the start of operational activity until the beginning of 1935. In that year CCA, with a paid up capital of one million lire, began lending operations, but just after a few months had to suspend its activity following the outbreak of hostilities with Ethiopia (Tuccimei 1998)..

Besides local initiatives, mention should be made of loans to Eritrea’s agricultural sector by Italian banks not present with their own branch offices in the Colony. In fact, in the autumn of 1930 the Societa’ Imprese Africane was created with the aim of developing a plantation system for agriculture in the Italian holdings in the horn of Africa. This was a Banca Commerciale Italiana enterprise in which other Italian financial institutions also took part as shareholders. The capital of

22

Società Imprese Africane was initially fixed at 3 million lire. This company obtained in concession from the colonial government of Eritrea 16,000 hectares of land on the Tessenei plain in the west, near the Sudanese border, to be destined for the cultivation of cotton.

9. Summary and Conclusion The paper offers an overview of the early stages of monetary and

banking development of Eritrea at the time when this country was under Italian colonial rule. As pointed out by many development economists monetization and financial development have a positive interaction with economic growth (Drake 1980). Economic development must have started in Eritrea after the rise of banking industry. Italy began the colonisation of Eritrea in the period 1880-1890, but the foundations of the monetary and banking system in the country occurred in the first two decades of the 20th century, at the time when the Colony benefited of the favourable economic conditions resulting from the export boom during World War I. The Bank of Italy, in those years, played a leading role in promoting the financial development process. This policy was implemented by widening the monetary area and by supporting actively the establishment of autonomous financial institutions. The design was to transform, in due time, the Eritrean branch of the Italian central bank into a new fully independent financial institution. The Italian invasion of Ethiopia launched from Eritrea in 1935 and the following merger of the two countries into the Italian East African Empire (A.O.I.) set up a broad colonial banking network, extended to cover all Italian possessions in the Horn of Africa and closely linked with the metropolitan financial system. This event, however, marked the failure of the attempts to create an autonomous financial system in Eritrea. The development process for the establishment of an autonomous monetary and banking system of the country took off again only in 1993, once the independence had been finally achieved.

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BIBLIOGRAPHY

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ALAMANNI E.Q.M., La colonia Eritrea e i suoi commerci, Bocca, Torino 1891.

AREDO D., The Informal and Semi-formal Financial Sectors in Ethiopia: a Study of the Iqqub, Iddir and Savings and Credit Co-operatives, African Economic Research Consortium, Research Paper 21, Nairobi 1993. BANCA D’ITALIA, Annual Reports. BANCA D’ITALIA, La Banca d’Italia nelle terre d’oltremare, Poligrafico dello Stato, Roma 1940. BARTOLOZZI E., Il regime del credito agrario nelle colonie italiane, Poligrafico dello Stato, Roma 1933. BATTISTELLA G., “Il credito agrario in colonia”, in Rassegna Economica dell’Africa Italiana, August 1937. BATTISTELLA G., Il credito agrario e fondiario in Africa, Tripoli 1941. BEGASHAW G., “The Economic Role of Traditional Savings and Credit Intitutions in Ethiopia”, Savings and Development, n. 4, 1978. CARBONERI G., Il tallero di Maria Teresa e la questione monetaria della Colonia Eritrea, Ministero degli Affari Esteri, Roma 1912. CAROSELLI F.S., Scritti coloniali, Bologna 1941. CASELLI C. and A. MAURI, Moneta e banca in Etiopia, G. Dell’Amore Foundation, Giuffrè, Milano 1986.

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COLUCCI M., “Sistemi di accertamento e di pubblicità dei diritti fondiari nelle colonie”, in Atti del seondo congresso di studi coloniali, Firenze 1936. CONFALONIERI A., Banca e industria in Italia, 1894-1906, vol. II, Banca Commerciale Italiana, Milano 1975. CORA G., Il commercio di importazione e di esportazione dall’Etiopia nel 1911, Ministero delle Colonie, Roma 1913. DE ROSA L., Soria del Banco di Roma ( dalle origini al 1911), vol. I, Roma 1982. DE ROSA L., Storia del Banco di Roma (dal 1911 al 1928), vol. II, Roma 1983. DE ROSA L., Storia del Banco di Roma (dal 1929 al 1955), vol. III, Roma 1984. DRAKE P.J., Money, Finance and Development, Martin Robertson, Oxford, 1980. EINZIG P., Primitive Money, Pergamon Press, London 1966. GARRONE N., Istituti speciali di credito, Vallardi, Milano 1942. GRIERSON Ph., The Origins of Money, Athlone Press, London 1977. LABANCA N., Oltremare. Storia dell’espansione coloniale italiana, Il Mulino, Bologna 2002. MARIANI L., “Relazione” in Ministero delle Colonie, Il nuovo tallero italiano, Unione Editrice, Roma 1918. MAURI A., “Alcune forme tradizionali di intermediazione creditizia in Etiopia”, Il Riparmio, n. 3, 1967. MAURI A., Il mercato del credito in Etiopia, Giuffrè, Milano 1967. MAURI A., “Le credit dans la colonie italienne d’Erythree”, in Revue Internationale d’Histoire de la Banque, n. 20-21, 1980. MAURI A., “The First Monetary and Banking Experiences in Eritrea”, in African Review of Money, Finance and Banking, n. 1-2, 1998. PANKHURST R., “The History of Currency and Banking in Ethiopia and in the Horn of Africa from the Middle Ages to 1935”, Ethiopia Observer, n. 4, 1965. PETAZZI E., “Il problema monetario nell’Eritrea”, in Rivista d’Africa, novembre 1911. POLLERA A., Il regime della proprietà terriera in Etiopia e in Colonia Eritrea, Roma 1913. POLLERA A., La vita commerciale etiopica e la circolazione monetaria eritrea, Istituto Coloniale Italiano, Tivoli 1926. ROCHAT G., Il colonialismo italiano, Loescher Editore, Torino 1974.

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ROSSETTI C., Il regime monetario delle colonie italiane, Loescher, Roma 1914. SANTAGATA F., La Colonia Eritrea nel Mar Rosso davanti all’Abissinia, Libreria Internazionale Treves, Napoli 1935. SPAGNOLI O., “L’esperienza coloniale della Banca d’Italia”, in Realtà, vol. XXIV, 1938. TAPPI M., “Gli ordinamenti fondiari nelle nostre colonie”, in L’agricoltura coloniale, n. 6, Firenze 1926. TEODORANI P., Commerci e dogane del Tigrai, Tipografia Francescana, Asmara 1912. TSCHOEGL A.E., “Maria Theresa’s Thaler: a Case of International Money”, Eastern Economic Journal, vol. 27, n. 4, 2001. TUCCIMEI E., La Banca d’Italia in Africa. Introduzione all’attività dell’istituto di emissione nelle colonie dall’età Crispina alla seconda guerra mondiale, vol. VIII Collana storica della Banca d’Italia, Laterza, Bari 1999. ZECARIAS A., Land Tenure in Eritrea, Addis Printing Press, Addis Ababa 1966. ZERVOS A., L’empire d’Ethiopie: le miroir de l’Ethiopie moderne, copywrited in Athens, printed in Alexandria 1936. ZEWDE B., History of Modern Ethiopia 1855-1974, Addis Ababa University Press, Addis Ababa 1991.

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CONTENTS Abstract………………………………………………….1 1. Introduction… ……………………………..2 2. The Colony of Eritrea……………………... 3 3. The Monetary Setting ……………………4

4. The Bank of Italy lands in Eritrea…………..7 5. The Circulation of Banknotes………………11 6. The Founding of Eritrean Banks……………12 7. The Banking Crisis …………………………14 8. Agricultural Credit…………………………17 9. Summary and Conclusion………………….21 BIBLIOGRAPHY …………………………...22.

La serie dei Working Papers del Dipartimento di Economia Politica e Aziendale può essere richiesta al seguente indirizzo: Sezione Working Papers - Dipartimento di Economia Politica e Aziendale - Università degli Studi di Milano, Via Conservatorio 7 - 20122 Milano - Italy - fax 39-02-50321450 - Email: Dipeco@unimi.it. A partire dal numero 98.01, i working papers sono scaricabili dal sito Internet del dipartimento, all’indirizzo: http://www.economia.unimi.it The Working Paper Series of the Dipartimento di Economia Politica e Aziendale can be requested at the following address: Sezione Working Papers - Dipartimento di Economia Politica e Aziendale - Università degli Studi di Milano, Via Conservatorio 7 - 20122 Milano - Italy - fax 39-02-50321450 - Email: Dipeco@unimi.it. From number 98.01, working papers are downloadable from the Internet website of the Department at the following location: http://www.economia.unimi.it

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Preliminary Notes 96.07 – I. VALSECCHI, Job Assignment and Promotion 96.08 – D. CHECCHI, L'efficacia del sistema scolastico in prospettiva storica 97.01 – I. VALSECCHI, Promotion and Hierarchy: A Review 97.02 – D. CHECCHI, Disuguaglianza e crescita. Materiali didattici 97.03 – M. SALVATI, Una rivoluzione copernicana: l'ingresso nell'Unione Economica e Monetaria 97.04 – V. CERASI - B. CHIZZOLINI - M. IVALDI, The Impact of Deregulation on Branching and Entry Costs in the Banking Industry 97.05 – P.L. PORTA, Turning to Adam Smith 97.06 – M. FLORIO, On Cross-Country Comparability of Government Statistics:OECD National Accounts 1960-94 97.07 – F. DONZELLI, Pareto's Mechanical Dream 98.01 – V. CERASI - S. DALTUNG, Close-Relationships between Banks and Firms: Is it Good or Bad? 98.02 – M. FLORIO - R. LUCCHETTI - F. QUAGLIA, Grandi e piccole imprese nel Centro-Nord e nel Mezzogiorno: un modello empirico dell'impatto occupazionale nel lungo periodo 98.03 – V. CERASI – B. CHIZZOLINI – M. IVALDI, Branching and Competitiveness across Regions in the Italian Banking Industry 98.04 – M. FLORIO – A. GIUNTA, Planning Contracts in Southern Italy, 1986-1997: a Prelimary Evaluation 98.05 – M. FLORIO – I. VALSECCHI, Planning Agreements in the Mezzogiorno: a Principle Agent Analysis 98.06 – S. COLAUTTI, Indicatori di dotazione infrastrutturale: un confronto tra Milano e alcune città europee 98.07 – G. PIZZUTTO, La teoria fiscale dei prezzi in un’economia aperta 98.08 – M. FLORIO, Economic Theory, Russia and the fading “Washington Consensus” 99.01 – A. VERNIZZI – A. SABA, Alcuni effetti della riforma della legislazione fiscale italiana nei confronti delle famiglie con reddito da lavoro dipendente 99.02 – C. MICHELINI, Equivalence Scales and Consumption Inequality: A Study of Household Consumption Patterns in Italy 99.03 – S.M. IACUS, Efficient Estimation of Dynamical Systems 99.04 – G. BOGNETTI, Nuove forme di gestione dei servizi pubblici 99.05 – G.M. BERNAREGGI, Milano e la finanza pubblica negli anni 90: attualità e prospettive

99.06 – M. FLORIO, An International Comparison of the Financial and Economic Rate of Return of Development 99.07 – M. FLORIO, La valutazione delle politiche di sviluppo locale 99.08 – I. VALSECCHI, Organisational Design: Decision Rules, Operating Costs and Delay 99.09 – G. PIZZUTTO, Arbitraggio e mercati finanziari nel breve periodo. Un’introduzione 00.01 – D. LA TORRE – M. ROCCA, A.e. Convex Functions on Rn 00.02 – S. M. IACUS – YU A. KUTOYANTS, Semiparametric Hypotheses Testing for Dynamical Systems with Small Noise 00.03 – S. FEDELI – M. SANTONI, Endogenous Institutions in Bureaucratic Compliance Games 00.04 – D. LA TORRE – M. ROCCA, Integral Representation of Functions: New Proofs of Classical Results 00.05 – D. LA TORRE – M. ROCCA, An Optimization Problem in IFS Theory with Distribution Functions 00.06 – M. SANTONI, Specific excise taxation in a unionised differentiated duopoly 00.07 – H. GRAVELLE – G. MASIERO, Quality incentives under a capitation regime: the role of patient expectations 00.08 – E. MARELLI – G. PORRO, Flexibility and innovation in regional labour markets: the case of Lombardy 00.09 – A. MAURI, La finanza informale nelle economie in via di sviluppo 00.10 – D. CHECCHI, Time series evidence on union densities in European countries 00.11 – D. CHECCHI, Does educational achievement help to explain income inequality? 00.12 – G. BOESSO – A. VERNIZZI, Carichi di famiglia nell’Imposta sui Redditi delle Persone Fisiche in Italia e in Europa: alcune proposte per l’Italia 01.01 G. NICOLINI, A method to define strata boundaries 01.02 – S. M. IACUS, Statistical analysis of the inhomogeneous telegrapher’s process 01.03 – M. SANTONIi, Discriminatory procurement policy with cash limits can lower imports: an example 01.04 – D. LA TORRE, L’uso dell’ottimizzazione non lineare nella procedura di compressione di immagini con IFS 01.05 – G. MASIERO, Patient movements and practice attractiveness 01.06 – S. M. IACUS, Statistic analysis of stochastic resonance with ergodic diffusion noise 01.07 – B. ANTONIOLI – G. BOGNETTI, Modelli di offerta dei servizi pubblici locali in Europa 01.08 – M. FLORIO, The welfare impact of a privatisation: the British Telecom case-history 01.09 – G. P. CRESPI, The effect of economic policy in oligopoly. A variational inequality approach. 01.10 – G. BONO – D. CHECCHI, La disuguaglianza a Milano negli anni ’90 01.11 – D. LA TORRE, On the notion of entropy and optimization problems 01.12 – M. FLORIO – A. GIUNTA, L’esperienza dei contratti di programma: una valutazione a metà percorso 01.13 – M. FLORIO – S. COLAUTTI, A logistic growth law for government expenditures: an explanatory analysis 01.14 – L. ZANDERIGHI, Town Center Management: uno strumento innovativo per la valorizzazione del centro storico e del commercio urbano

01.15 – A. MAFFIOLETTI – M. SANTONI, Do trade union leaders violate subjective expected utility? Some insights from experimental data 01.16 – D. LA TORRE, An inverse problem for stochastic growth models with iterated function systems 01.17 – D. LA TORRE – M. ROCCA, Some remarks on second-order generalized derivatives for C1,1 functions 01.18 – A. BUCCI, Human capital and technology in growth 01.19 – R. BRAU – M. FLORIO, Privatisation as price reforms: an analysis of consumers’ welfare change in the UK 01.20 – A. SPRANZI, Impresa e consumerismo: la comunicazione consumeristica 01.21 – G. BERTOLA – D. CHECCHI, Sorting and private education in Italy 01.22 – G. BOESSO, Analisi della performance ed external reporting: bilanci e dati aziendali on-line in Italia 01.23 – G. BOGNETTI, Il processo di privatizzazione nell’attuale contesto internazionale 02.01 – D. CHECCHI – J. VISSER, Pattern persistence in european trade union density 02.02 – G. P. CRESPI – D. LA TORRE – M. ROCCA, Second order optimality conditions for differentiable functions 02.03 – S. M. IACUS – D. LA TORRE, Approximating distribution functions by iterated function systems 02.04 – A. BUCCI – D. CHECCHI, Crescita e disuguaglianza nei redditi a livello mondiale 02.05 – A. BUCCI, Potere di mercato ed innovazione tecnologica nei recenti modelli di crescita endogena con concorrenza imperfetta 02.06 – A. BUCCI, When Romer meets Lucas: on human capital, imperfect competition and growth 02.07 – S. M. IACUS – D. LA TORRE, On fractal distribution function estimation and applications 02.08 – P. GIRARDELLO – O. NICOLIS – G. TONDINI, Comparing conditional variance models: theory and empirical evidence 02.09 – L. CAMPIGLIO, Issues in the measurement of price indices: a new measure of inflation 02.10 – D. LA TORRE – M. ROCCA, A characterization of Ck,1 functions 02.11 – D. LA TORRE – M. ROCCA, Approximating continuous functions by iterated function systems and optimization problems 02.12 – D. LA TORRE – M. ROCCA, A survey on C1,1 functions: theory, numerical methods and applications 02.13 – D. LA TORRE – M. ROCCA, C1,1 functions and optimality conditions 02.14 – D. CHECCHI, Formazione e percorsi lavorativi dei laureati dell’Università degli Studi di Milano 02.15 – D. CHECCHI – V. DARDANONI, Mobility comparisons: Does using different measures matter? 02.16 – D. CHECCHI – C. LUCIFORA, Unions and Labour Market Institutions in Europe 02.17 – G. BOESSO, Forms of voluntary disclosure: reccomendations and business practices in Europe and U.S. 02.18 – A. MAURI – C.G. BAICU, Storia della banca in Romania – Parte Prima - 02.19 – D. LA TORRE – C. VERCELLIS, C1,1approximations of generalized support vector machines 02.20 – D. LA TORRE, On generalized derivatives for C1,1 vector functions and optimality conditions 02.21 – D. LA TORRE, Necessary optimality conditions for nonsmooth optimization problems 02.22 – D. LA TORRE, Solving cardinality constrained portfolio optimization problems by C 1,1 approximations 02.23 – M. FLORIO – K. MANZONI, The abnormal returns of UK privatisations: from underpricing to outperformance 02.24 – M. FLORIO, A state without ownership: the welfare impact of British privatisations 1979-1997 02.25 – S.M.IACUS – D. LA TORRE, Nonparametric estimation of distribution and density functions in presence of missing data: an IFS approach 02.26 – S.M. IACUS – G. PORRO, Il lavoro interinale in Italia: uno sguardo all’offerta 02.27 –G.P.CRESPI – D. LA TORRE, M. ROCCA, Second-order optimality conditions for nonsmooth multiobjective 02.28– D. CHECCHI –T. JAPPELLI, School Choice and Quality 03.01– D. CHECCHI, The Italian educational system family background and social stratification 03.02 – G. NICOLINI, – D. MARASIN, I Campionamento per popolazioni rare ed elusive: la matrice dei profili 03.03 – S. COMI, Intergenerational mobility in Europe: evidence from ECHP 03.04 – A. MAURI, Origins and early development of banking in Ethiopia 03.05 – A. ALBERICI, Strategie bancarie e tecnologia 03.06 – D. LA TORRE – M. ROCCA, On C^(1,1) constrained optimization problems 03.07 – M. BRATTI – A. BUCCI, Effetti di complementarietà, accumulazione di capitale umano e crescita economica: teoria e risultati empirici 03.08 – R. MacCULLOCH – S. PEZZINI, The role of freedom, growth and religion in the taste for revolution 03.09 – L. PILOTTI –N. RIGHETTO, A.GANZAROLI Web strategy and intelligent software agents in decision process

for networks knowledge based 03.10 – G. P. CRESPI –D. LA TORRE – M. ROCCA, Mollified derivatives and second-order optimality conditions 03.11 – A. BUCCI, R&D, imperfect competition and growth with human capital accumulation 03.12 – G. NICOLINI – A. LO PRESTI, Combined estimators for complex sampling 03.13 – M. FLORIO – S. VIGNETTI, Cost-benefit analysis of infrastructure projects in an enlarged European Union:

an incentive-oriented approach 03.14 – M. FLORIO, Electricity prices as signals for the evaluation of reforms: an empirical analysis of four European

countries

03.15 – A. FILIPPIN, Discrimination and workers’ expectations 03.16 – A. FILIPPIN, Discrimination and workers’ expectations: experimental evidence 03.17 – D. VANDONE, Il mercato italiano dei fondi di investimento socialmente responsabili 03.18– M. FINI, Uno sguardo sul concetto di differenziale dalle origini ai giorni nostri: tra storia e teoria 03.19 – M. SANTONI – F. ZUCCHINI, Legislative output and the costitutional court in Italy 03.20 – A. MARINI, Programmazione multi-obiettivo: teoria e applicazioni 03.21 – M. FLORIO – M. GRASSENI, The missing shock: the macroeconomic impact of British privatisation 03.22 – A. ALBERICI, La banca cooperativa da banca della comunità locale a bene utile alle comunità servite 03.23 – G. NICOLINI – F. DE BATTISTI, A formative model for measuring customer satisfaction with a degree course 03.24 – G. NICOLINI – A. LO PRESTI, Estimation methods for mixed populations 03.25 – M. SPANO’, Stock market expectations, effects on prices and aggregate income 03.26 – M. SPANO’, Productivity shocks and hedging: theory and evidence 03.27 – F. DE BATTISTI – G. NICOLINI – S. SALINI, The rasch model to measure service quality 03.28 – A. MAURI, Eritrea’s early stages in monetary and banking development