Open Access
Enforceability and risk-sharing in financial contracts : from the sea loan to the commenda in late medieval Venice
Loading...
Files
Gonzalez_De_Lara_2000.pdf (15.84 MB)
Full-text in Open Access
License
Access Rights
Cadmus Permanent Link
Full-text via DOI
ISBN
ISSN
Issue Date
Type of Publication
Keyword(s)
LC Subject Heading
Other Topic(s)
EUI Research Cluster(s)
Initial version
Published version
Succeeding version
Preceding version
Published version part
Earlier different version
Initial format
Author(s)
Citation
Florence : European University Institute, 2000
EUI; ECO; PhD Thesis
Cite
GONZALEZ DE LARA, Yadira, Enforceability and risk-sharing in financial contracts : from the sea loan to the commenda in late medieval Venice, Florence : European University Institute, 2000, EUI, ECO, PhD Thesis - https://hdl.handle.net/1814/4938
Abstract
Long lasting sea loan and commenda contracts can be seen as optimal contracts in economies with enforcement and verifiability constraints. These contracts allowed the financing of ’large commercial enterprises' for more them 15 centuries. While the sea loan (a simple debt contract) was the dominant contract until the beginning of the Commercial Revolution, the more refined (state-contingent) commenda (a simple equity contract) replaced it when, and where, the verifiability constraints ceased to be binding. A simple contracting model that captures these features is developed. Then, using data from Venice commerce in the period 1021-12611 advance that in late medieval Venice institutions for contract enforcement were based on the authority of the "state”. By the state I mean a third-party enforcer with coercive power. However, this state-based mechanism cannot be identified with the legal system, at least as traditionally described by economic historians and economists. It went far beyond securing property rights, ensuring freedom of contracts, and providing impartial justice. The peculiarity of this state-based mechanism for contract enforcement is that it also generated verifiable information, coercive power, and incentives for merchants to submit themselves to the coercive power of the state. To these ends, the Venetians implemented a whole set of institutional arrangements that reflected and reinforced the entire organization of the society, both political- and economically. These institutional arrangements rendered effective the expectation of being punished by the state for embezzling part of all of the funds entrusted by financiers. In doing so, they enabled a fairly developed system of contracts, including the commenda. Moreover, the development of better ’’legal institutions and judicial enforcement" also enabled the transition from the sea loan to the commenda. This, empirically supported, explanation for the development of alternative financial contracts differs from a simple 'reputation mechanism' where financing is done through networks (families. etc.).
Table of Contents
Additional Information
Defence date: 23 June 2000
Examining board: Prof. Avner Greif, Stanford University ; Prof. Ramon Marimon, EUI, Supervisor ; Prof. Leandro Prados de la Escosura, Universidad Carlos III, Madrid ; Prof. Jaime Reis, EUI
PDF of thesis uploaded from the Library digitised archive of EUI PhD theses completed between 2013 and 2017
First made available in Open Access: 13 March 2025
Examining board: Prof. Avner Greif, Stanford University ; Prof. Ramon Marimon, EUI, Supervisor ; Prof. Leandro Prados de la Escosura, Universidad Carlos III, Madrid ; Prof. Jaime Reis, EUI
PDF of thesis uploaded from the Library digitised archive of EUI PhD theses completed between 2013 and 2017
First made available in Open Access: 13 March 2025