Introduction

The literature has analysed the importance of institutions in solving liquidity constraints and mitigating information asymmetries and the principal-agent problem, enabling the emergence of impersonal financial markets capable of financing long-distance trade across continents. The literature has focused on the role of institutions in mitigating transaction costs, signalling the joint-stock corporation as the necessary organisational innovation that made possible the development of sustained long-distance trade. The case of Manila and its financing of the Pacific exchange represents a different instance in which a capital market emerged from different building blocks. The capital market of Manila financed long-distance trade across the Pacific through sea loans, legacy funds, and lay confraternities, mitigating risk and enabling the origination of large volumes of working capital for commerce.