The Medici and Renaissance Complexity: How the Challenges of Renaissance Banking Finally Defeated the First Multinational Bank

Abstract

This story begins as early as the fifteenth century, with one of the most famous banks in history, that of the Medici in Renaissance Florence. Many of the complexities related to a rapidly growing multinational bank were evident in the Medici Bank. The different banking products can be identified and explained. The risks of lending to sovereigns become understandable. The need to delegate management to capable and correctly incentivised managers was central to both the success and the failure of the Medici Bank. An early example of absence of management becomes apparent when Lorenzo the Magnificent was consumed by politics and abandons the management of his bank.