When Things Go Wrong: Credit, Defaults and Institutions in Early Modern Venice

The chapter analyses how merchants and political institutions cope with failures and defaults that compromise credit relationships in an early modern trading center. Focussing on the structure of financing business and trade in Venice and on the legal framework that protects creditors, the essay links the widespread form of trading company (the temporary partnership) to the large recourse to arbitration procedures for solving disputes, and to the lesser efficiency of institutional and legal frameworks traditionally securing credit rights in Venice. 'Credit, Defaults and Institutions in Early Modern Venice' concludes with the hypothesis that the changing commercial environment and the spread of temporary societies reduce the protective strenght of Venetian institutions and increase instability in financing international trade.