This article examines the institutional foundations of the financial market underpinning Venice's commercial success during the late medieval period. A public-order, reputation-based institution enabled merchants to commit (i) not to flee with investors' capital, despite the limited geographical...

The commercial success of Venice hinged on her merchants¿ ability to do business with borrowed money. However, to raise other people¿s capital, merchants needed to commit not to embezzle the capital received. Despite this commitment problem, the evidence indicates an active financial market...

This paper proposes a historically-grounded mechanism-design model of corporate finance, with two-side risk aversion under limited contract enforceability, where (inside) equity held by entrepreneurs, debt and (outside) equity coexist. This capital structure shares optimally the...