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  • Jewish communities were expelled from cities in the south of Italy in 1503
  • A leading economist argues the impacts of this are still visible today
  • Jews provided a flow of credit in northern cities leading to the first banks
  • This has led to a 10 per cent income gap between north and south Italy

They have suffered a long history of persecution and, in some cases, Jews were actively expelled from entire regions of Medieval Europe.

But cities that tolerated and allowed Jewish communities to flourish may still be reaping the benefits today, according to a new academic paper.

It argues that in these areas, Jewish communities were instrumental in the establishment of some of the early banks during the Renaissance and the effects are still noticeable in modern economies.


Professor Luigi Pascali, an economist at the University of Warwick and Pompeu Fabra University in Barcelona, claims the presence of Jewish moneylenders and pawnbrokers during the 1500s resulted in more credit being available in municipalities.

 This flow of cash ensured that productivity and income was able to increase.
Speaking to MailOnline, Professor Pascali said: ‘I argue that cities, in which the local Jewish community in 1500 caused an early development of the banking sector, have more banks today and, because of this, are more developed today.

‘Local banking development has a large causal impact on economic development.
‘In particular, using firm-level data, I show that a higher density of local banks increases aggregate productivity in the manufacturing sector, by reallocating resources towards the most productive firms.
‘This is the main channel through which local banks have an effect on economic development.’
In his paper, published in The Review of Economics and Statistics, Professor Pascali examines the presence of Jewish communities in Italian cities during the Renaissance.
In 1503, a large part of the south of Italy, including the Kingdom of Naples fell under the control of the Spanish crown, which had decreed all Jews convert to Christianity or be driven out of its territories.
However, in the north of the country, which remained either under French


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