Not up to your scholarly level, I don’t think. I’m largely going on the reading/research I did using De Roover and others to write http://en.wikipedia.org/wiki/Medici_Bank , where I was struck by the wretched subterfuges that merchants had to resort to and the general lack of sophistication, which struck me as quite different from Chinese systems with genuine fiat currency, undisguised interest, and general sophistication (there may’ve been Chinese insurance in there too, but I’ve forgotten any details of that).
Well, I’ve read a paper that supports a different perspective: usury laws were historically circumvented in the West and Middle East through clever use of (what we now call) the Put-Call Parity Theorem: any bonds that were issued were converted into a combination of puts, calls, and possibly rental contracts. This retains the substance of an interest-bearing loan, but without any explicit “interest payment” While the law might have been sophisticated, the resulting use of derivatives contracts was not.
The paper discusses the origin of mortgages in medieval England and the Middle East. It’s been a while since I read it, so I can’t summarize it, but I was shocked by their rather early trading of derivatives and options.
Not up to your scholarly level, I don’t think. I’m largely going on the reading/research I did using De Roover and others to write http://en.wikipedia.org/wiki/Medici_Bank , where I was struck by the wretched subterfuges that merchants had to resort to and the general lack of sophistication, which struck me as quite different from Chinese systems with genuine fiat currency, undisguised interest, and general sophistication (there may’ve been Chinese insurance in there too, but I’ve forgotten any details of that).
Well, I’ve read a paper that supports a different perspective: usury laws were historically circumvented in the West and Middle East through clever use of (what we now call) the Put-Call Parity Theorem: any bonds that were issued were converted into a combination of puts, calls, and possibly rental contracts. This retains the substance of an interest-bearing loan, but without any explicit “interest payment” While the law might have been sophisticated, the resulting use of derivatives contracts was not.
The paper discusses the origin of mortgages in medieval England and the Middle East. It’s been a while since I read it, so I can’t summarize it, but I was shocked by their rather early trading of derivatives and options.
If it’s any good, interest (or ursary) was only legalised in England in 1571, up to a value of 10%.
Citation: Praise and Paradox; Merchants and craftsmen in Elizabethan popular literature, Laura Caroline Stevenson.