ABSTRACT
In Europe from the fifth to the eleventh century there were practically no financial mechanisms to facilitate the transformation of saving into investment. Those who saved either invested directly or hoarded, and most loans were for consumption purposes. The economy thus suffered from the deflationary effects of hoarding and from a lack of productive investment. With the growth of cities, credit developed very rapidly in the shape of deferred payments for goods sold-sale credit-which boosted consumption as well as investment (especially with the formation of stocks of raw materials and merchants’ inventories).2 However, a whole series of more sophisticated innovations were introduced to make it easier both to save and to transform saving into productive investment. A typical example is the introduction in the tenth century and the subsequent spread of the contratto di commenda.
