Organisational and accounting responses to bankruptcy: the case of Ferrara Monte di Pietà (1598 and 1646)

The Monte di Pietà of Ferrara, established in 1507, played a preponderant role in the socio-economic development of Ferrara. The charitable organisation became an intermediary between the supply and the demand of money and contributed to the development of a financing system addressed to poor social classes and of a financial intermediation market. This study examines how the Monte di Pietà of Ferrara responded to the bankruptcies occurred in 1598 and 1646, with a focus on its governance, assets, accounting and information system and control mechanisms. The results show that the reforms resulting from the two crises had different outcomes. In fact, while the first reform was efficient, it was not effective, leading to another bankruptcy. On the contrary, the second reform was effective but inefficient: it prevented another bankruptcy to occur, although it worsened the organisational procedures.