A tale of "Benevolent" governments: Private credit markets, public finance, and the role of Jewish lenders in medieval and Renaissance Italy

This article illustrates the impact of Jewish lenders on private credit markets and public finance in medieval and Renaissance Italian towns. In Tuscan private credit markets, Jewish lending helped households to smooth consumption, buy working capital, and provide dowries for daughters. Jewish lenders also helped the public finances of the communes in which they resided. This article shows that public finance considerations affected the choice of the interest-rate ceiling Jews were allowed to charge. In many instances, the communes raised the interest-rate ceiling for Jewish lenders in order to tax or borrow the proceeds.