History of Finance[edit]

Though its principles are much older, the field of Finance's founding and progress coincides with the
start and evolution of civilization at large. We see continuous reformation and innovation in Finance
throughout history.
The earliest historical evidence is from the year 3000 BC We see that Banking originated
in Babylonian empire where in Temples and palaces were used as safe places for the storage of
valuables. Initially, the valuable that can be deposited was only grain, but later cattle and precious
materials are also included. Almost during the same time period, in the Sumerian city Uruk in
Mesopotamia trade was supported by lending. The usage of interest as well was found to be used.In
Sumerian “interest” was mas, which also meant calf. In Greece and Egypt the words used for
interest (tokos and ms respectively) also meant “to give birth”. In these cultures interest indicates an
increase in something. They seem to consider it from lenders point of view. [3]
During the Reign of Hammurabi (1792-1750 BC) in Babylon (the capital city of Babylonia). The
famous Code of Hammurabi includes laws governing banking operations. The Babylonians, were
accustomed to charge interest at the rate of 20 per cent per annum.
In the Biblical world point of view within the Jewish Civilisation (1500 BC), Jews were not allowed to
take interest from other Jews, but they were allowed to take interest from the gentiles, as we see in
the scriptures writings such as:
"If you lend money to any of my people with you who is poor, you shall not be him as a creditor, and
you shall not exact interest from him. (Exodus :20)
You shall not lend upon interest to your brother, interest on money, interest on victuals [foodstuff]
interest on anything that is lent for interest. 20To a foreigner you may lend upon interest, but to your
brother you shall not lend upon interest…” (Deu:23).
The reason for the non-prohibition of the receipt by a Jew of interest from a Gentile, and vice versa,
is held by modern rabbis to lay in the fact that the Gentiles had at that time no law forbidding them to
practice usury; and that as they took interest from Jews, the Torah considered it equitable that Jews
should take interest from Gentiles. In Hebrew, interest is neshek.
In contrast to other ancient civilizations “interest is considered from borrowers point of view.
By 1200 BC Cowrie shell is used as “money” in China.
Abd by 640 BC , the Lydians started to use coin money. Lydia was the first place where permanent
retail shops opened. (Herodotus mentions the use of crude coins in Lydia in an earlier date, i.e. 687
BC.)