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The birth of sacred finance: the Knights templar and the European economic order

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  • Mehmet Ali Polat

    (Uludag University)

Abstract

This study examines the economic organisation developed by the Knights Templar within a political economy framework. Beyond functioning as a religious order, the Templars established structured practices of capital management, liquidity coordination, public finance, and trust-based financial administration, contributing to the emergence of an early form of organised financial activity in medieval Europe. From the perspective of institutional analysis, the Templar model may be interpreted as an important historical precursor to later financial institutions. Within the relatively rigid production structures of feudal society, the Order developed a multi-layered network linking production, trade, credit, and royal finance. In doing so, it facilitated capital mobility, supported monetary circulation, and reinforced a culture of financial trust. This process illustrates the compatibility of religious legitimacy with structured economic administration and contributed to reshaping the relationship between political authority, ecclesiastical institutions, and organised capital. The study conceptualises this model as a form of “sacred finance” and discusses its significance for the early evolution of European political economy.

Suggested Citation

  • Mehmet Ali Polat, 2026. "The birth of sacred finance: the Knights templar and the European economic order," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 73(1), pages 1-16, June.
    • Handle: RePEc:spr:inrvec:v:73:y:2026:i:1:d:10.1007_s12232-026-00530-4
    DOI: 10.1007/s12232-026-00530-4
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    1. Hicks, J. R., 1969. "A Theory of Economic History," OUP Catalogue, Oxford University Press, number 9780198811633.
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    Keywords

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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Systems; Standards; Regimes; Government and the Monetary System
    • P14 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Property Rights
    • N23 - Economic History - - Financial Markets and Institutions - - - Europe: Pre-1913

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