Banks and development : Jewish communities in the Italian Renaissance and current economic performance
AbstractAre 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.
Pascali, Luigi. (2016) Banks and development : Jewish communities in the Italian Renaissance and current economic performance. Review of Economics and Statistics, 98 (1). pp. 140-158. ISSN 0034-6535