BANKING: Development and Growth
There was meager historical evidence as to nature of banking operations before the 13th century. It was quite difficult to distinguish between commercial banks and other types of banks during the earlier period. It was believed that commercial banking evolved only in the later part of medieval times from the ancient practices of moneylending and moneychanging. In the case of central banking, it began to develop in Europe during the middle of 1600.
There were records of loans in the temples of Babylon as early as 2000 B.C. Temples then were considered sacred places under the special protection of the gods.
Companies of traders conducted banking activities which were related to buying and selling of goods. Banking was performed in Greece during the 4th century B.C. through temples, public bodies and private ...view middle of the document...
Deposit banking again appeared in Medieval Europe. The legal doctrine of negotiability gradually developed from the 16th century to the 18th century.
The Fugger family was the greatest moneylender during the 16th century.
BEGINNING OF COMMERCIAL BANKING
The bankers of the Mediterranean cities were the direct ancestors of modern commercial banking. It was only in 1587 that the Banco della Piazza di Rialto was founded in Venice.This is the first real public bank. The Bank of Deposit in Barcelona which had been organized in 1401 and Casa di San Giorgio established in genoa in 1407.
Banking in England
England’s finance was not fully developed as those in continental Europe. Said finance was not as fully developed as those in continental Europe. The nature of their banking was mostly concentrated on granting of loans to the crown, collection and transmission of papal revenues, and financing of trade. Bills of exchange were popularly used but they were not used as money. Bank notes were not known. Interest rates were controlled by the state.
Goldsmiths Started Banking
1640, goldsmiths were engaged in money-lending using their own funds. They therefore used the money of the merchants in expanding their moneylending business.
The undesirable conditions in the banking system caused by many goldsmiths paved the way for the foundation of the Bank of England in 1694 in response to public clamor. It was a privately-owned bank. The bank was later on nationalized in 1946.
DEVELOPMENT OF BANKING IN THE PHILIPPINES
During the Spanish time, rich and religious citizens donated money for charitable and pious projects. Such funds were then called obras pias which means pious works. These were managed by religious confraternities. Interest rates were based on the degree of risks of the business.
Obras Pias became the forerunner of banking institution in the Philippines. They were started by Father Juan Fernandez de Leon in 1754. The last of the obras pias ended in 1820.