Press Releases
English Monarchs identified as sub-prime borrowers…..in the 14th century
Release Date : 24 September 2007
Financial experts from the University of Reading's ICMA Centre are to investigate how medieval credit finance arrangements have formed the basis for today's loans.
Professor Chris Brooks and Dr Adrian Bell have been awarded a major research grant - worth just over £350,000 - by the Economic and Social Research Council to investigate the early and innovative use of credit finance by a succession of English medieval monarchs.
The study - entitled Credit Finance in the Middle Ages: Loans to the English Crown c. 1272-1340 - will examine in detail the credit finance arrangements used by Edward I, II and III from both a historical perspective as well as utilising the approaches and models developed recently for the analysis of modern-day sovereign borrowings.
Dr Bell, Director of Teaching and Learning at the ICMA Centre, said: "We are delighted our application to the ESRC for a grant for this project has been successful in an intensively competitive funding environment.
"Evidence suggests that English monarchs were sub-prime borrowers, allegedly causing the Frescobaldi of Florence to suffer a 'run on the bank' at the turn of the 14th century. This arose precisely as a consequence of a lack of investor confidence due to the bank's loans to the unreliable Edward I, the then King of England.
"There is a famous quote from JK Galbraith which states that, 'there can be few fields of human endeavour in which history counts for so little as in the world of finance'. Considering the recent credit crisis and the Northern Rock debacle, on the contrary, perhaps by studying the history of finance we may better understand the financial markets of today. Our research will show that while the sums involved are now slightly bigger, the problems bear striking parallels with those over seven centuries ago."
It is evident that credit relationships between the English crown and Italian merchant societies supported the efficient running of the English government and financed a succession of wars.
The study will examine the credit finance arrangements used by Edward I, II and III from both a historical perspective and for the analysis of modern-day sovereign borrowings. The sources of agreements between Edwards I, II and III and their various creditors over the period 1272-1340 will be transcribed and translated to build a numerical record of the timings of borrowings and repayments, as well as details of "favours" or side payments.
Professor Brooks and Dr Bell expect to be able to show that modern financial practices for managing governmental expenses were understood by a succession of medieval monarchs. These findings will also draw out parallels with modern banking crises that have affected certain developing countries.
They will work on a number of publications and also the production of the transcription and translations of original sources. The project will build upon the work done by the same team during 2004/5 for the ESRC funded research project, 'Modern Finance in the Middle Ages? Advance Contracts for the supply of wool'.
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Notes to editors:
For more information contact Lucy Ferguson, Media Relations Manager, University of Reading at l.ferguson@reading.ac.uk, or Lucy Hogg, Marketing Manager, ICMA, at l.hogg@icmacentre.reading.ac.uk.
More information about ICMA Centre:
The ICMA Centre, University of Reading has an international reputation for providing quality undergraduate, postgraduate and executive education tailored to the capital markets industry. The ICMA Centre's success is based not only on the integration of applied finance theory and industry specific training but also its considerable professional and academic expertise, and strong links with companies and trade associations in the global finance industry. Established in 1991 with funding provided by the International Capital Market Association (ICMA) in Zurich, the Centre is housed in a purpose-built modernist building with state-of-the-art facilities including two dealing rooms.
More information about ICMA:
The International Capital Market Association (ICMA) is the self-regulatory organisation and trade association for the international securities market. Its primary role is to oversee the fast-changing marketplace through the issuing of rules and recommendations relating to trading and settlement practices. ICMA currently has over 400 members in almost 50 countries and has a proven track record in representing their interests. In addition to its regulatory role, ICMA also provides its member firms - and other users - with a range of services, products and support.
More about the Economic and Social Research Council:
The Economic and Social Research Council (ESRC) funds research and training in social and economic issues. It is an independent organisation, established by Royal Charter, but receives most of its funding through the Department for Innovation, Universities and Skills. Its budget of £181 million (2007/2008) funds more than 2,500 researchers in academic institutions and policy research institutes throughout the UK. It also supports more than 2,000 postgraduate students.