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Risk Management, Credit and the Working of Merchants’ Networks in Early Modern Banking

In: Decision Taking, Confidence and Risk Management in Banks from Early Modernity to the 20th Century

Author

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  • Daniel Velinov

    (CNRS)

Abstract

This chapter contributes to the debate on the organisation of long-distance trade in early modern Europe. It challenges the commonly attributed importance of familial, city-based, regional, national, ethnic or religious affiliations to generating trust, credit and risk mitigation. Based on an analysis of the exchange business of the Antwerp banker de la Bistrate and of his European correspondents in the seventeenth century, the crucial importance of commission trading for the structuring of early modern trade and trade relations is stressed. It is demonstrated that risk mitigation relies on procedures that are inherent to the system of commission trading. The notions of credit and reputation relate intrinsically to the principal-agent relationship for which this chapter provides a new understanding with respect to the commonly accepted model.

Suggested Citation

  • Daniel Velinov, 2017. "Risk Management, Credit and the Working of Merchants’ Networks in Early Modern Banking," Palgrave Studies in the History of Finance, in: Korinna Schönhärl (ed.), Decision Taking, Confidence and Risk Management in Banks from Early Modernity to the 20th Century, pages 235-267, Palgrave Macmillan.
    • Handle: RePEc:pal:psitcp:978-3-319-42076-9_11
    DOI: 10.1007/978-3-319-42076-9_11
    as

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