IDEAS home Printed from https://ideas.repec.org/a/eee/exehis/v47y2010i2p213-227.html
   My bibliography  Save this article

Bills of exchange, interest bans, and impersonal exchange in Islam and Christianity

Author

Listed:
  • Rubin, Jared

Abstract

A vast economic history literature suggests that medieval institutions supporting contract enforcement were necessary for impersonal exchange to emerge. Yet this literature cannot account for the bill of exchange, an important financial instrument that had positive legal standing in both the medieval Islamic and Christian worlds but remained relegated to personal networks only in the former. This paper suggests that a seemingly innocuous difference - the involvement of currency exchange in European but not Middle Eastern bills, a difference resulting from the secular legalization of interest in Europe - encouraged divergent endogenous processes resulting in these distinct institutional arrangements.

Suggested Citation

  • 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.
    • Handle: RePEc:eee:exehis:v:47:y:2010:i:2:p:213-227
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0014-4983(09)00056-4
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Timur Kuran, 2004. "The Economic Ascent of the Middle East’s Religious Minorities: The Role of Islamic Legal Pluralism," The Journal of Legal Studies, University of Chicago Press, vol. 33(2), pages 475-515, June.
    2. Paul R. Milgrom & Douglass C. North & Barry R. Weingast*, 1990. "The Role Of Institutions In The Revival Of Trade: The Law Merchant, Private Judges, And The Champagne Fairs," Economics and Politics, Wiley Blackwell, vol. 2(1), pages 1-23, March.
    3. 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.
    4. Greif, Avner & Laitin, David D., 2004. "A Theory of Endogenous Institutional Change," American Political Science Review, Cambridge University Press, vol. 98(4), pages 633-652, November.
    5. Jared Rubin, 2009. "Social Insurance, Commitment, and the Origin of Law: Interest Bans in Early Christianity," Journal of Law and Economics, University of Chicago Press, vol. 52(4), pages 761-786, November.
    6. Cosgel, Metin & Miceli, Thomas & Ahmed, Rasha, 2009. "Law, state power, and taxation in Islamic history," Journal of Economic Behavior & Organization, Elsevier, vol. 71(3), pages 704-717, September.
    7. Greif,Avner, 2006. "Institutions and the Path to the Modern Economy," Cambridge Books, Cambridge University Press, number 9780521480444.
    8. Clay, Karen, 1997. "Trade, Institutions, and Credit," Explorations in Economic History, Elsevier, vol. 34(4), pages 495-521, October.
    9. Douglass C. North, 1991. "Institutions," Journal of Economic Perspectives, American Economic Association, vol. 5(1), pages 97-112, Winter.
    10. Greif, Avner, 1992. "Institutions and International Trade: Lessons from the Commercial Revolution," American Economic Review, American Economic Association, vol. 82(2), pages 128-133, May.
    11. Daron Acemoglu & Simon Johnson & James Robinson, 2005. "The Rise of Europe: Atlantic Trade, Institutional Change, and Economic Growth," American Economic Review, American Economic Association, vol. 95(3), pages 546-579, June.
    12. 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 525-548, June.
    13. Alfred E. Lieber, 1968. "Eastern Business Practices and Medieval European Commerce," Economic History Review, Economic History Society, vol. 21(2), pages 230-243, August.
    14. 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(3), pages 250-250.
    15. de Roover, Raymond, 1946. "The Medici Bank Financial and Commercial Operations," The Journal of Economic History, Cambridge University Press, vol. 6(2), pages 153-172, November.
    16. de Roover, Raymond, 1946. "The Medici Bank Organization and Management," The Journal of Economic History, Cambridge University Press, vol. 6(1), pages 24-52, May.
    17. Labib, Subhi Y., 1969. "Capitalism in Medieval Islam," The Journal of Economic History, Cambridge University Press, vol. 29(1), pages 79-96, March.
    18. Kuran, Timur, 2005. "The logic of financial westernization in the Middle East," Journal of Economic Behavior & Organization, Elsevier, vol. 56(4), pages 593-615, April.
    19. Abbott Payson Usher, 1914. "The Origin of the Bill of Exchange," Journal of Political Economy, University of Chicago Press, vol. 22(6), pages 566-566.
    20. Gregory Clark, 2007. "Introduction to A Farewell to Alms: A Brief Economic History of the World," Introductory Chapters, in: A Farewell to Alms: A Brief Economic History of the World, Princeton University Press.
    21. 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 745-776, August.
    22. Greif, Avner, 2000. "The fundamental problem of exchange: A research agenda in Historical Institutional Analysis," European Review of Economic History, Cambridge University Press, vol. 4(3), pages 251-284, December.
    23. Joseph Persky, 2007. "Retrospectives: From Usury to Interest," Journal of Economic Perspectives, American Economic Association, vol. 21(1), pages 227-236, Winter.
    24. Clay, Karen, 1997. "Trade without Law: Private-Order Institutions in Mexican California," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 13(1), pages 202-231, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Nikolay Nenovsky & Pencho Penchev, 2016. "Money without a State: Currencies of the Orthodox Christians in the Balkan Provinces of the Ottoman Empire (17th –19th centuries)," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 29(1), pages 33-51, March.
    2. Javier Mejia, 2018. "Social Networks and Entrepreneurship. Evidence from a Historical Episode of Industrialization," Working Papers 20180020, New York University Abu Dhabi, Department of Social Science, revised Sep 2018.
    3. Chaudhary, Latika & Rubin, Jared, 2016. "Religious identity and the provision of public goods: Evidence from the Indian Princely States," Journal of Comparative Economics, Elsevier, vol. 44(3), pages 461-483.
    4. Graham Brownlow, 2015. "Back to the failure: an analytic narrative of the De Lorean debacle," Business History, Taylor & Francis Journals, vol. 57(1), pages 156-181, January.
    5. Mark Koyama, 2008. "Evading the 'Taint of Usury' Complex Contracts and Segmented Capital Markets," Economics Series Working Papers 412, University of Oxford, Department of Economics.
    6. Raffaele Danna, 2019. "Figuring out: the spread of Hindu-Arabic numerals in the European tradition of practical mathematics (13th-16th centuries)," Working Papers 35, Department of Economic and Social History at the University of Cambridge, revised 03 Aug 2019.
    7. Zegarra, Luis Felipe, 2017. "Usury laws and private credit in Lima, Peru. Evidence from notarized records," Explorations in Economic History, Elsevier, vol. 65(C), pages 68-93.
    8. Theresa Finley & Mark Koyama, 2018. "Plague, Politics, and Pogroms: The Black Death, the Rule of Law, and the Persecution of Jews in the Holy Roman Empire," Journal of Law and Economics, University of Chicago Press, vol. 61(2), pages 253-277.
    9. Nogues-Marco, Pilar, 2017. "Money Markets and Exchange Rates in Pre-Industrial Europe," Working Papers unige:100808, University of Geneva, Paul Bairoch Institute of Economic History.
    10. Koyama, Mark, 2010. "Evading the 'Taint of Usury': The usury prohibition as a barrier to entry," Explorations in Economic History, Elsevier, vol. 47(4), pages 420-442, October.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ogilvie, Sheilagh & Carus, A.W., 2014. "Institutions and Economic Growth in Historical Perspective," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 2, chapter 8, pages 403-513, Elsevier.
    2. Mika Kallioinen, 2017. "Inter‐communal institutions in medieval trade," Economic History Review, Economic History Society, vol. 70(4), pages 1131-1152, November.
    3. Lars Boerner & Daniel Quint, 2023. "Medieval Matching Markets," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 64(1), pages 23-56, February.
    4. Diego Puga & Daniel Trefler, 2014. "International Trade and Institutional Change: Medieval Venice’s Response to Globalization," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 129(2), pages 753-821.
    5. Nunn, Nathan & Trefler, Daniel, 2014. "Domestic Institutions as a Source of Comparative Advantage," Handbook of International Economics, in: Gopinath, G. & Helpman, . & Rogoff, K. (ed.), Handbook of International Economics, edition 1, volume 4, chapter 0, pages 263-315, Elsevier.
    6. Belloc Marianna, 2009. "Cross-Cultural Trade and Institutional Stability," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 9(1), pages 1-25, October.
    7. Daron Acemoglu & Alexander Wolitzky, 2015. "Sustaining Cooperation: Community Enforcement vs. Specialized Enforcement," NBER Working Papers 21457, National Bureau of Economic Research, Inc.
    8. Stringham, Edward, 2003. "The extralegal development of securities trading in seventeenth-century Amsterdam," The Quarterly Review of Economics and Finance, Elsevier, vol. 43(2), pages 321-344.
    9. Clay, Karen, 1997. "Trade, Institutions, and Credit," Explorations in Economic History, Elsevier, vol. 34(4), pages 495-521, October.
    10. Stephan Haggard & Marcus Noland, 2018. "Networks, Trust and Trade: The Microeconomics of China–North Korea Integration," Asian Economic Journal, East Asian Economic Association, vol. 32(3), pages 277-299, September.
    11. Avner Greif, 1997. "On the Social Foundations and Historical Development of Institutions that Facilitate Impersonal Exchange: From the Community Responsibility System to Individual Legal Responsibility in Pre-modern Euro," Working Papers 97016, Stanford University, Department of Economics.
    12. Haggard, Stephan & Lee, Jennifer & Noland, Marcus, 2012. "Integration in the absence of institutions: China–North Korea cross-border exchange," Journal of Asian Economics, Elsevier, vol. 23(2), pages 130-145.
    13. Davies, Elwyn & Fafchamps, Marcel, 2021. "When no bad deed goes punished: Relational contracting in Ghana and the UK," Journal of Economic Behavior & Organization, Elsevier, vol. 191(C), pages 714-737.
    14. Mark Koyama, 2008. "Evading the 'Taint of Usury' Complex Contracts and Segmented Capital Markets," Economics Series Working Papers 412, University of Oxford, Department of Economics.
    15. Alice Nicole Sindzingre, 2007. "Poverty traps: a perspective from development economics," EconomiX Working Papers 2007-26, University of Paris Nanterre, EconomiX.
    16. Gagliardi, Francesca, 2008. "Institutions and economic change: A critical survey of the new institutional approaches and empirical evidence," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 37(1), pages 416-443, February.
    17. Broadberry Stephen, 2012. "Recent Developments in the Theory of Very Long Run Growth: A Historical Appraisal," Jahrbuch für Wirtschaftsgeschichte / Economic History Yearbook, De Gruyter, vol. 53(1), pages 277-306, May.
    18. van Bavel, Bas, 2016. "The Invisible Hand?: How Market Economies have Emerged and Declined Since AD 500," OUP Catalogue, Oxford University Press, number 9780199608133.
    19. Maze, Armelle, 2006. "Multilateral reputation mechanisms and contract law in agriculture : complement or substitutes," 2006 Annual meeting, July 23-26, Long Beach, CA 21285, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    20. Jens Prüfer, 2016. "Business Associations and Private Ordering," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 32(2), pages 306-358.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:exehis:v:47:y:2010:i:2:p:213-227. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/622830 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.