Modern capitalism requires institutions that provide financial capital to entrepreneurs. The need for financial capital has been inherent in capitalism since the middle ages and was equally strong for ancient commercial enterprises. The financial institutions and instruments developed in early modern Europe, however, did not exist in the Roman world. This chapter argues that we need to analyse Roman financial institutions for what they were and relate them to the levels of commerce and production they made possible. The focus is on commercial intermediaries (deposit bankers and others) who offered financial services bridging the gap between those who had money and those who needed it. Roman credit markets relied on open-access institutions. In the heartlands and hubs of the empire credit markets were thick and capital flowed easily from investors, through intermediaries, to entrepreneurs and back. But this was not true everywhere, and throughout its history, even in the areas where credit markets were thick, social networks were essential for financial transfers to be possible. Anonymous transactions through an impersonal financial market remained a marginal phenomenon because the negotiability of financial instruments did not support the development of such a market. In the absence of a central banking system with a structural lender of last resort and an interlocking network of banks, the money supply remained largely limited to the stock of metal currency. The Roman financial system was sophisticated and efficiently fulfilled the needs of estate owners, farmers, craftsmen, shippers, merchants, and retailers, but never realized a financial revolution comparable to that which gave birth to the modern banking system.
Rural credit markets in South Africa: A review of theory and empirical evidence
