Merchant banks were invented in Italy by grain merchants. The Jews who were fleeing from Spanish persecution, came to Italy and were attracted to the trade. With their ancient practicles, intended for…

 

What is a merchant bank?

Marchant banks are financial institutions that provide services to individuals and businesses such as financial advice, store of wealth, loans and more.

History

Merchant banks were invented in italy by grain merchants. The Jews who were fleeing from spanish persecution, came to Italy and were attracted to the trade. With their ancient practicles, intended for finance of long journeys, they used these methods for the production of grain. Jews could not hold land in Italy, so they entered the great trading piazzas (a part of a city dedicated to trading goods and services) to trade their crops. Christians were forbidden the sin of usury (to charge in interest or loans to increase their own wealth), but Jews were not, so they had the big advantage. The Jews could give interest on their loans to further their wealth.

The jewish trader would perform both finance (credit) and underwriting (finance). An example is, he would finance a farmer to manufacture an annual crop and underwite the delivery of the farmers crop. He would also keep the farmer in business if there was a drought or other crop failure.