Learning from others' failure: the rise of the Monte di pietà in early modern Bologna

The essay examines the impact of the financial crisis of the late XVI century on Bologna's banking firms. The crisis exposed structural weaknesses and insuficient capitalization of traditional family-based banking houses. Financial instability and failure prompted institutional changes. To restore confidence, in Bologna traditional banking firms were gradually replaced by a peculiar city-sponsored and community-based credit institution (monte di pietà) that rose from the function of public pawnshop to that of a de facto public bank. State support and consumer preference decreed the success of a new more regulated and more specialised credit structure.