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Course: World history>Unit 3

Lesson 17: Development of financial institutions

Focus on spread of knowledge: financial institutions

Problem

Before answering the question, read the following excerpt.
"By comparison [to twelfth and thirteenth-century northern Italy], economic life in the Eastern world - in the Abbasid Caliphate or [Song] China - was far more advanced (...). To discover modern finance, Europe had to import it. In this, a crucial role was played by a young mathematician called Leonardo of Pisa, or Fibonacci.
The son of a Pisan customs official based in what is now Bejaia in Algeria, the young Fibonacci had immersed himself in what he called the ‘Indian method’ of mathematics, a combination of Indian and Arab insights. His introduction of these ideas was to revolutionize the way Europeans counted. Nowadays he is best remembered for the Fibonacci sequence of numbers … But the Fibonacci sequence as only one of many Eastern mathematical ideas introduced to Europe in his path-breaking book Liber Abaci, ‘The Book of Calculation’, which he published in 1202. In it, readers could find fractions explained, as well as the concept of present value...Most important of all was Fibonacci’s introduction of Hindu-Arabic numerals. He not only gave Europe the decimal system, which makes all kinds of calculation far easier than with Roman numerals; he also showed how it could be applied to commercial bookkeeping, to currency conversions and, crucially, to the calculation of interest."
From Niall Ferguson, The Ascent of Money: A Financial History of the World (New York: Penguin Press, 2008), 32-33.
What does Ferguson claim about the relative economic development of twelfth and thirteenth century Italy compared to Song China and the Abbasid Caliphate?