The Investments of the Neapolitan Public Banks: A Long Run View (1587–1806)

We quantify the operations of deposits and investments of the public banks in Naples between the end of the seventeenth to the beginning of the nineteenth century. Drawing on the vast accounting documentation produced by the banks, we reconstruct at half yearly frequency the composition of their balance sheets as deposits (or fedi di credito, which circulated as near-money), reserves and many investment categories. The quantitative history of the banks highlights their resilience to recurrent crises. We argue that the banks found the right balance between public supervision and independence. After the crisis of 1622, they radically innovated their business model by switching to a more prudent investment policy and lending mainly against pawns. Both these facts explain their survival for over two centuries.