Moneychangers and the local credit market in late Renaissance Florence. A social network analysis

This chapter studies the structure and functioning of the interpersonal credit network in fifteenth-century Florence, focusing particularly on intermediation. To this end, the research centers on a specific professional group, the moneychangers. They were trained accountants and among the few individuals in the city with ready cash, which allowed them to be very active in the credit market. However, the sources show that they were not only lenders, but also intermediaries and guarantors. The chapter uses social network analysis (SNA) to investigate the main characteristics of the credit network and uses a multilevel algorithm to identify and study the communities that compose it. The analysis confirms the strength of professional and geographical homophily in network formation. Moreover, it stresses the important bridging role that moneychangers had in the Florentine credit market and the ways through which they linked various communities of the network with each other. The paper confirms quantitatively and qualitatively the important contribution of moneychangers to the efficiency of the local credit market – identified here as the capacity of the market to match debtors and creditors. They helped to overcome asymmetries of information, spreading trust, and lowering transaction costs.