How banks worked around year 1500 or so?
Been playing Assassin’s Creed recently and had a thought. How actually banks worked back then?
I mean a guy could show up and ask for a loan. Let’s say he wants 1000 for a week. All goes well -> the guy returns money with interest. But the other outcome is – the guy decides to move to another city or simply don’t go to the bank. How the bank would get its money back, considering that there were a lot less documents and such for each person? Probably some of them didn’t have an ID or some kind of an equivalent.
Wife suggested that bank didn’t have out loans to poor people at all because was impossible to know whether the guy returns money or not.
In: Economics
You had to be “someone” in order to get a loan. A noble, a knight, a merchant, royalty, a high level member of the clergy. It should be noted that it was extremely risky to lend to these people, particularly royalty. As a guy with a large army was always able to fight off the bailiffs. It was common for banks to go bankrupt because a king would take a loan and then just not pay it back. It is generally believed that Phillip IV of France ordered the Kinghts Templar to be destroyed to escape his debts to them. The banks that hung around for a while were run by people who were really, really good at assessing risk.
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