J’Accuse! Antisemitism and Financial Markets in the time of the Dreyfus Affair

This paper studies discrimination in financial markets in the context of the "Dreyfus Affair" in 19th century France. We analyze the market performance of firms with Jewish board members during this historical episode. Building on empirical evidence and a model with antisemitic and unbiase...

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Bibliographic Details
Published inIDEAS Working Paper Series from RePEc
Main Authors Quoc-Anh Do, Galbiati, Roberto, Marx, Benjamin, Serrano, Miguel
Format Paper
LanguageEnglish
Published St. Louis Federal Reserve Bank of St. Louis 01.01.2020
Subjects
Antisemitism
Securities markets
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Summary:This paper studies discrimination in financial markets in the context of the "Dreyfus Affair" in 19th century France. We analyze the market performance of firms with Jewish board members during this historical episode. Building on empirical evidence and a model with antisemitic and unbiased agents, we show how investors betting on firms with Jewish connections earned higher returns during the media campaign organized to rehabilitate Dreyfus, the unfairly accused Jewish officer at the center of the Affair. Our paper provides novel evidence that discrimination can affect stock prices and create rents for some market participants. While these rents may attract betting against discriminators, the uncertainty surrounding discriminatory beliefs can limit the extent of arbitrage and allow discrimination to survive in the long run. (This abstract was borrowed from another version of this item.)