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Banks and Development: Jewish Communities in the Italian Renaissance and Current Economic Performance

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  • Luigi Pascali

    (Universitat Pompeu Fabra, University of Warwick, CAGE, and Barcelona GSE)

Abstract

Are differences in local banking development long lasting? Do they affect economic performance? I answer these questions by relying on a historical development that occurred in Italian cities during the Renaissance. A change in Catholic doctrine led to the development of modern banks in cities hosting Jewish communities. Using Jewish demography in 1500 as an instrument, I provide evidence of extraordinary persistence in the level of banking development across Italian cities and substantial effects of local banks on per capita income. Additional firm-level analyses suggest that banks exert large effects on aggregate productivity by reallocating resources toward more efficient firms.

Suggested Citation

  • Luigi Pascali, 2016. "Banks and Development: Jewish Communities in the Italian Renaissance and Current Economic Performance," The Review of Economics and Statistics, MIT Press, vol. 98(1), pages 140-158, March.
  • Handle: RePEc:tpr:restat:v:98:y:2016:i:1:p:140-158
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    Cited by:

    1. Marcel Prokopczuk & Francesco D'Acunto & Michael Weber, 2015. "Distrust in Finance Lingers: Jewish Persecution and Households' Investments," 2015 Meeting Papers 26, Society for Economic Dynamics.
    2. Pere Arqué-Castells & Elisabet Viladecans-Marsal, 2013. "Banking towards development: Evidence from the Spanish banking expansion plan," Working Papers 2013/8, Institut d'Economia de Barcelona (IEB).
    3. Mevlude Akbulut-Yuksel & Mutlu Yuksel, 2015. "The Long-Term Direct and External Effects of Jewish Expulsions in Nazi Germany," American Economic Journal: Economic Policy, American Economic Association, vol. 7(3), pages 58-85, August.
    4. Belke, Ansgar & Haskamp, Ulrich & Setzer, Ralph, 2016. "Regional bank efficiency and its effect on regional growth in “normal” and “bad” times," Economic Modelling, Elsevier, vol. 58(C), pages 413-426.
    5. Giampaolo Lecce & Laura Ogliari & Tommaso Orlando, 2017. "Resistance to Institutions and Cultural Distance: Brigandage in Post-Unification Italy," Cowles Foundation Discussion Papers 2097, Cowles Foundation for Research in Economics, Yale University.
    6. Irena Grosfeld & Alexander Rodnyansky & Ekaterina Zhuravskaya, 2010. "Persistent anti-market culture: A legacy of the Pale of Settlement and of the Holocaust," PSE Working Papers halshs-00564927, HAL.
    7. Irena Grosfeld & Alexander Rodnyansky & Ekaterina Zhuravskaya, 2010. "Persistent anti-market culture: A legacy of the Pale of Settlement and of the Holocaust," Working Papers halshs-00564927, HAL.
    8. Becker, Sascha O. & Pascali, Luigi, 2016. "Religion, Division of Labor and Conflict: Anti-Semitism in German Regions over 600 Years," CAGE Online Working Paper Series 288, Competitive Advantage in the Global Economy (CAGE).
    9. Finley, Theresa & Koyama, Mark, 2016. "Plague, Politics, and Pogroms: The Black Death, Rule of Law, and the persecution of Jews in the Holy Roman Empire," MPRA Paper 72110, University Library of Munich, Germany.
    10. Francesco D'Acunto & Marcel Prokopczuk & Michael Weber, 2017. "Historical Antisemitism, Ethnic Specialization, and Financial Development," CESifo Working Paper Series 6643, CESifo Group Munich.
    11. Lehmann-Hasemeyer, Sibylle H. & Wahl, Fabian, 2017. "Savings banks and the industrial revolution in Prussia: Supporting regional development with public financial institutions," Hohenheim Discussion Papers in Business, Economics and Social Sciences 18-2017, University of Hohenheim, Faculty of Business, Economics and Social Sciences.
    12. Cemal Eren Arbatli & Gunes Gokmen, 2016. "Minorities, Human Capital and Long-Run Development: Persistence of Armenian and Greek Influence in Turkey," CESifo Working Paper Series 6268, CESifo Group Munich.
    13. Stephan Heblich & Alex Trew, 2015. "Banking and Industrialization," CESifo Working Paper Series 5503, CESifo Group Munich.
    14. Remi Jedwab & Mark Koyama & Noel Johnson, "undated". "Negative Shocks and Mass Persecutions: Evidence from the Black Death," Working Papers 2017-4, The George Washington University, Institute for International Economic Policy.
    15. Pere Arqué-castells & Elisabet Viladecans-Marsal, 2016. "Banking the unbanked: Evidence from the Spanish Banking Expansion Plan," Working Papers 2016/24, Institut d'Economia de Barcelona (IEB).
    16. Bengtsson, Niklas & Pettersson, Jan, 2012. "The Outreach and Sustainability of Microfinance: Is There a Tradeoff?," Working Paper Series, Center for Labor Studies 2012:18, Uppsala University, Department of Economics.
    17. Akbulut-Yuksel, Mevlude & Okoye, Dozie & Yuksel, Mutlu, 2017. "Learning to Participate in Politics: Evidence from Jewish Expulsions in Nazi Germany," IZA Discussion Papers 10778, Institute for the Study of Labor (IZA).
    18. Grosfeld, Irena & Sakalli, Seyhun Orcan & Zhuravskaya, Ekaterina, 2017. "Middleman Minorities and Ethnic Violence: Anti-Jewish Pogroms in the Russian Empire," CEPR Discussion Papers 12154, C.E.P.R. Discussion Papers.
    19. repec:eee:juecon:v:104:y:2018:i:c:p:47-58 is not listed on IDEAS

    More about this item

    Keywords

    Banks; Economic development; Persistence; Jewish demography;

    JEL classification:

    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

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