Origins of the European financial markets

This article is transcribed from a 2015 podcast given by Dr Anne Murphy of the University of Hertfordshire. In it Dr Murphy looks at the early origins of the European financial markets from the Italian Renaissance to the present day, as well as providing a useful introduction to finance, the stock market and the bond market.

Finance gets a very bad press these days. There is even a tendency amongst some commentators to suggest that financial systems don’t offer anything of value to society. So, while it is true that finance can create huge problems, it does also offer a lot to the economy. Let’s start our discussion of the origins of financial markets by thinking about what finance does.

The economist Ross Levine has identified five key functions of the financial system. He says that finance, first, facilitates the trading, hedging, diversifying and pooling of risk. In other words, it allows people to manage the risks of their financial exposure...