Evading the 'Taint of Usury' Complex Contracts and Segmented Capital Markets
AbstractWhat were the economic consequences of the usury doctrine in the Middle Ages?� We examine how merchants attempted to evade the prohibition on interest and the attempts of the Church to clamp down on evasion.� Contrary to the views of many economists and historians, the usury prohibition imposed different transaction costs on medieval merchants: increasing the cost of using capital markets for some merchants more than for others.� Since only a subsection of the merchant population were able to write licit contracts, the prohibition had the effect of segmenting markets in which formal credit was important.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number 412.
Date of creation: 01 Nov 2008
Date of revision:
Usury; Transaction Costs; Contracts;
Find related papers by JEL classification:
- N23 - Economic History - - Financial Markets and Institutions - - - Europe: Pre-1913
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Jain, Sanjay, 1999. "Symbiosis vs. crowding-out: the interaction of formal and informal credit markets in developing countries," Journal of Development Economics, Elsevier, vol. 59(2), pages 419-444, August.
- Greif, Avner, 1994. "Cultural Beliefs and the Organization of Society: A Historical and Theoretical Reflection on Collectivist and Individualist Societies," Journal of Political Economy, University of Chicago Press, vol. 102(5), pages 912-50, October.
- Reed, Clyde G. & Bekar, Cliff T., 2003. "Religious prohibitions against usury," Explorations in Economic History, Elsevier, vol. 40(4), pages 347-368, October.
- Temin, Peter, 2004. "Financial Intermediation in the Early Roman Empire," The Journal of Economic History, Cambridge University Press, vol. 64(03), pages 705-733, September.
- Postan, M. M., 1951. "Italy and the Economic Development of England in the Middle Ages," The Journal of Economic History, Cambridge University Press, vol. 11(04), pages 339-346, September.
- De Lara, Yadira Gonzalez, 2001. "Enforceability And Risk-Sharing In Financial Contracts: From The Sea Loan To The Commenda In Late Medieval Venice," The Journal of Economic History, Cambridge University Press, vol. 61(02), pages 500-504, June.
- Bhaduri, Amit, 1977. "On the Formation of Usurious Interest Rates in Backward Agriculture," Cambridge Journal of Economics, Oxford University Press, vol. 1(4), pages 341-52, December.
- Coate, Stephen & Ravallion, Martin, 1993. "Reciprocity without commitment : Characterization and performance of informal insurance arrangements," Journal of Development Economics, Elsevier, vol. 40(1), pages 1-24, February.
- Munro, John H., 2007. "The usury doctrine and urban public finances in late-medieval Flanders (1220 - 1550): rentes (annuities), excise taxes, and income transfers from the poor to the rich," MPRA Paper 11012, University Library of Munich, Germany, revised Jan 2008.
- Deepak Lal, 2001. "Unintended Consequences: The Impact of Factor Endowments, Culture, and Politics on Long-Run Economic Performance," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262621541, June.
- De Lara, Yadira Gonzalez, 2002. "Institutions for contract enforcement and risk-sharing: From the sea loan to the commenda in late medieval Venice," European Review of Economic History, Cambridge University Press, vol. 6(02), pages 257-262, August.
- Dani Rodrik & Arvind Subramanian & Francesco Trebbi, 2004.
"Institutions Rule: The Primacy of Institutions Over Geography and Integration in Economic Development,"
Journal of Economic Growth,
Springer, vol. 9(2), pages 131-165, 06.
- Dani Rodrik & Arvind Subramanian & Francesco Trebbi, 2002. "Institutions Rule: The Primacy of Institutions over Geography and Integration in Economic Development," NBER Working Papers 9305, National Bureau of Economic Research, Inc.
- Rodrik, Dani & Subramanian, Arvind & Trebbi, Francesco, 2002. "Institutions Rule: The Primacy of Institutions Over Geography and Integration in Economic Development," CEPR Discussion Papers 3643, C.E.P.R. Discussion Papers.
- Fratianni, Michele & Spinelli, Franco, 2006. "Italian city-states and financial evolution," European Review of Economic History, Cambridge University Press, vol. 10(03), pages 257-278, December.
- BLUM, Ulrich & DUDLEY, Leonard, 2003.
"Standardized Latin and Medieval Economic Growth,"
Cahiers de recherche
2003-17, Universite de Montreal, Departement de sciences economiques.
- Kocherlakota, Narayana R, 1996.
"Implications of Efficient Risk Sharing without Commitment,"
Review of Economic Studies,
Wiley Blackwell, vol. 63(4), pages 595-609, October.
- Narayana Kocherlakota, 2010. "Implications of Efficient Risk Sharing Without Commitment," Levine's Working Paper Archive 2053, David K. Levine.
- William N. Goetzmann, 2004.
"Fibonacci and the Financial Revolution,"
Yale School of Management Working Papers
ysm19, Yale School of Management.
- William N. Goetzmann, 2004. "Fibonacci and the Financial Revolution," NBER Working Papers 10352, National Bureau of Economic Research, Inc.
- William Goetzmann, 2003. "Fibonacci and the Financial Revolution," Yale School of Management Working Papers ysm432, Yale School of Management, revised 01 Mar 2004.
- Bell, Clive, 1990. "Interactions between Institutional and Informal Credit Agencies in Rural India," World Bank Economic Review, World Bank Group, vol. 4(3), pages 297-327, September.
- Melitz, Jacques, 1971. "Some Further Reassessment of the Scholastic Doctrine of Usury," Kyklos, Wiley Blackwell, vol. 24(3), pages 473-92.
- Ekelund, Robert B. & Hebert, Robert F. & Tollison, Robert D. & Anderson, Gary M. & Davidson, Audrey B., 1997. "Sacred Trust: The Medieval Church as an Economic Firm," OUP Catalogue, Oxford University Press, number 9780195103373.
- Elias L. Khalil, 1997. "The Red Queen Paradox: A Proper Name for a Popular Game - Note," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 153(2), pages 411-415, June.
- Raymond de Roover, 1944. "What is Dry Exchange? A Contribution to the Study of English Mercantilism," Journal of Political Economy, University of Chicago Press, vol. 52, pages 250.
- Pamuk, Sevket, 2004. "The evolution of financial institutions in the Ottoman Empire, 1600 1914," Financial History Review, Cambridge University Press, vol. 11(01), pages 7-32, April.
- Bose, Pinaki, 1998. "Formal-informal sector interaction in rural credit markets," Journal of Development Economics, Elsevier, vol. 56(2), pages 265-280, August.
- Greif, Avner, 1993. "Contract Enforceability and Economic Institutions in Early Trade: the Maghribi Traders' Coalition," American Economic Review, American Economic Association, vol. 83(3), pages 525-48, June.
- de Roover, Raymond, 1942. "Money, Banking, and Credit in Medieval Bruges," The Journal of Economic History, Cambridge University Press, vol. 2(S1), pages 52-65, December.
- Bulow, Jeremy I & Geanakoplos, John D & Klemperer, Paul D, 1985. "Multimarket Oligopoly: Strategic Substitutes and Complements," Journal of Political Economy, University of Chicago Press, vol. 93(3), pages 488-511, June.
- Franks, Julian & Sussman, Oren, 2005. "Financial innovations and corporate bankruptcy," Journal of Financial Intermediation, Elsevier, vol. 14(3), pages 283-317, July.
- John H. Munro, 2007. "The Usury Doctrine and Urban Public Finances in Late-Medieval Flanders: Annuities, Excise Taxes, and Income Transfers from the Poor to the Rich," Working Papers tecipa-288, University of Toronto, Department of Economics.
- Kimball, Miles S, 1988. "Farmers' Cooperatives as Behavior Toward Risk," American Economic Review, American Economic Association, vol. 78(1), pages 224-32, March.
- Greif, Avner & Milgrom, Paul & Weingast, Barry R, 1994. "Coordination, Commitment, and Enforcement: The Case of the Merchant Guild," Journal of Political Economy, University of Chicago Press, vol. 102(4), pages 745-76, August.
- Rubin, Jared, 2010. "Bills of exchange, interest bans, and impersonal exchange in Islam and Christianity," Explorations in Economic History, Elsevier, vol. 47(2), pages 213-227, April.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Caroline Wise).
If references are entirely missing, you can add them using this form.