I Believe: The Connection between Trust and the Development of Credit and Banking in Western-Europe

Nowadays, the reputation of financial institutions is an important topic in international financial economics. Financial crises, like the one in 2008, often deal a blow to the trust that people have in banks and in the financial system as a whole. However, lots of people do not even know why the banking system exists in the first place and how it came to be. This thesis provides a framework, which provides information about the relationship between trust and the development of credit and banking in three relevant, historical time periods; the Italian renaissance, the Dutch golden age and eighteenth century England. A wide variety of relevant literature was consulted and compared in order to get a good picture of how the system of credit and banking developed in those time periods as well as to what extent trust could be considered an important factor in this development. It turns out that there is no evidence to prove that people have disliked using credit over the ages, because of the risk credit contains in itself. However, the reputation of the parties involved as well as economic, social and political events turned out to be major factors in the development of the banking system. In conclusion to this research, one could say that trust has indeed played a major role in the development of credit and banking, over the ages. However, it is recommended to supplement or complement the findings in this research with a deepening or widening of the covered material, in order get a better picture of the story