The Informal Economy of Credit in Early Modern Venice

Shaw, James E.

doi:10.1017/s0018246x17000413

Cited by 7 publications

(6 citation statements)

References 49 publications

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“…Higher interest could also be hidden in the capital or arranged on the side (Fontaine, 2014, pp. 175-178;Rosenthal, 1993;Shaw, 2018). As all other credit terms, interest was understood to be negotiable.…”

Section: European Credit Markets Before Modern Bankingmentioning

confidence: 99%

Financialization and Sustainable Credit: Lessons from Non-Intermediated Transactions?

Svetiev

Dermineur²,

Kolanisi³

2022

J Consum Policy

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Does increasing access to finance promote human flourishing? And if so, are there pathways to sustainable credit and finance in the face of the perceived excesses of financialization? Can we reform or regulate the financial sector to promote sustainable credit and avoid over-indebtedness? These and similar questions have attracted considerable scholarly and public debate in the aftermath of the 2007 global financial crisis, with a growing focus on institutional alternatives to market exchange in finance and beyond. In this article, we study the persistence of non-intermediated credit, whereby lenders and borrowers engage in transactions directly and without financial intermediaries. Peer lending was a mainstay source of credit prior to the emergence of financial intermediaries and our benchmark case study outlines common features of credit relationships before modern banking in Europe. The other two case studies come from jurisdictions where non-intermediated credit persists on a broad scale, despite parties having formal access to modern finance. The aim of our contribution is threefold. First, we identify features of non-intermediated transactions that are consistent with a notion of sustainable credit, in the sense that they are not destabilising for the transacting parties (or the broader community). Secondly, we highlight the normative mechanisms that support non-intermediated credit across different settings to identify the scope conditions and limits for such transactions. Third, we evaluate such credit transactions along a set of normative benchmarks to draw out lessons for contemporary finance and financial regulation. We argue that even if non-intermediated credit cannot provide an alternative to modern finance, such transactions can help financial institutions tailor products to the needs of specific consumers or outsource credit assessment and repayment, while also allowing policymakers and regulators to identify and resolve concrete credit access problems for disadvantaged communities.

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Section: European Credit Markets Before Modern Bankingmentioning

confidence: 99%

Financialization and Sustainable Credit: Lessons from Non-Intermediated Transactions?

Svetiev

Dermineur²,

Kolanisi³

2022

J Consum Policy

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“…Traditional scholarship has argued that deferred payments did not feature any interest rate (Muldrew, 1998). Recently, however, some historians have showed that despite the absence of contract between the parties, oral transaction could possibly carry an interest rate (Shaw, 2018). Presumably, this rate was often lower than in written transactions.…”

Section: Varieties Of Creditmentioning

confidence: 99%

The evolution of credit networks in pre-industrial Finland

Dermineur

2021

Scandinavian Economic History Review

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This paper examines the specificities of interpersonal credit networks in both a rural and an urban setting in pre-industrial Finland. To analyse peer-to-peer lending, the article studies a sample of 1047 probate inventories from the town of Kristinestad and its surrounding rural area, the parish of Lappfjärd. These probate inventories feature more than 5000 credit relations between households for the period 1850-1855 and 1905-1914. This paper also concerns itself with the changes pertaining to the advent of banking institutions in the mid-nineteenth century. Traditional behavioural sciences argue that formal institutions replaced informal ones because they are more efficient, more inclusive, or both. No longer needed, informal institutions are supposed to have disappeared when formal ones emerged. But this argument does not consider the social contextor embeddedness, a term coined by Granovetterand the individuals evolving in it. Embeddedness does not disappear. Therefore, one may ask how banks penetrated communities and the credit networks that were already in place in order to supplant private lending. Tools from social network analysis help to draw insights into the features and changes pertaining to credit networks.

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“…Like most people, she would pay for the cow in several unprompted instalments. Her probate inventory does not specify an interest rate, but previous research has shown that it was often either paid on the side or included in the price (Dermineur 2018a; Shaw 2018). In this case, as for most of the cases in the dataset, it is impossible for us to know the terms of agreement between the two parties.…”

Section: IImentioning

confidence: 99%

“…Craig Muldrew (1998) argues that these were not subject to any interest rate in early modern England. Recently, James Shaw (2018) has demonstrated that interest rates were often hidden in any sort of transaction. It seems reasonable to assume that an immobilisation of capital requires a form of compensation, valued either in the form of an interest rate or as a future exchange of services.…”

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confidence: 99%

Peer-to-peer lending in pre-industrial France

Dermineur

2019

Financial History Review

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This article explores the world of informal financial transactions and informal networks in pre-industrial France. Often considered merely as simple daily transactions made to palliate a lack of cash in circulation and to smooth consumption, the examination of private transactions reveals not only that they served various purposes, including productive investments, but also that they proved to be dynamic. The debts they incurred helped to smooth consumption but also helped to make investments. Some lenders were more prominent than others, although no one really dominated the informal market. This article also compares informal transactions with formal ones through the study of probate inventories and notarial records respectively. It compares these two credit circuits, their similarities and different characteristics, and their various networks features. The debts incurred in the notarial credit market were more substantial but did not serve a different purpose than in the informal market. Here too, the biggest lenders did not monopolise the extension of capital. Perhaps the most striking result lies in the fact that the total volume of exchange between the informal credit market and the notarial credit market (after projection) was similar.

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The Informal Economy of Credit in Early Modern Venice

Cited by 7 publications

References 49 publications

Financialization and Sustainable Credit: Lessons from Non-Intermediated Transactions?

Financialization and Sustainable Credit: Lessons from Non-Intermediated Transactions?

The evolution of credit networks in pre-industrial Finland

Peer-to-peer lending in pre-industrial France

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