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.

Medieval Jewish moneylenders (painting of Medieval moneylenders pictured) and pawnbrokers in the northern city states of Italy during the Renaissance set those regions on the course to prosperity. By contrast, cities that expelled the Jews at around this time fell behind and this is still reflected in their economies today

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.

RISE OF LOMBARD BANKING The prosperous northern Italian region of Lombardy became a byword for a type of banking that grew out of mount of piety style pawnshops which originated in the region. A ruling by Pope Leo the Great forbade charging interest on loans on the basis getting profit on money without working was sinful. However, the Talmud allowed loans to be converted into investments so interest could accrue from them. Although Jews were not allowed to hold land, they would instead trade in crops. This allowed them to lend to farmers against crops in their fields. As the skills needed for bookmaking were passed down within Jewish families, they were able to keep this trade within the community. This led to the establishment of merchant banks and led to the establishment of powerful banking families. Lombard banks quickly spread to other cities in northern Italy and even in to the Papal states. Advertisement

'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 control or as independent city states, the Jews were able to remain.

Here they began establishing moneylending services after the Catholic Church, through several Ecclesiastical Councils, banned the practice of lending to earn a profit among Christians.

Professor Pascali said: 'Some Jews in Central Italy who had engaged in trade during the Middle Ages had accumulated sizeable fortunes and had both the capital and expertise to become moneylenders.

Medieval moneylenders (depicted in this painting by Rembrandt) ensured a flow of credit in cities that was not readily available in cities were Jews were expelled. Christian laws forbade the lending of money for interest, so Jews were able to dominate money lending, and in the cities where they remained, leading to the first banks

'Although the ban on Catholic [money lending] did not prevent the rise of a new class of Catholic merchant bankers, for more than a century the Jews enjoyed a monopoly in lending to the poor and the middle class.

'By the beginning of the 15th century, the geographic expansion of Jewish lending was complete and had become a general economic phenomenon in all parts of Italy.'

Jewish pawnbrokers also began to be established in many of the northern cities, ultimately leading to the creation of charitable loan banks, called the Monti di Pieta, in an attempt to drive them out of the market.

This meant even the poor could access credit if they needed it and these institutions still exist today.

While there are many that argue the expulsion of the Jews from southern Italy had a negative impact on the prosperity in the region at the time, Professor Pascali claims this can still be seen today.

In 1492 the Spanish crown ordered the expulsion of Jews from its kingdom and territories, leading them to be forced out of the cities in the kingdom of Naples and central Italy in the 1500s (illustrated in the map showing the expulsion of Jews in Europe). By contrast, Jewish communities remained in the northern city states

By looking at the presence of Jewish communities during the Renaissance and the current economic power of cities today, he claims there is a strong correlation.

According to his study, he estimates if the Jews had not been expelled from the Spanish territories, the GDP in southern Italy would have been seven per cent higher.

He said the expulsions of the Jews may explain at least 10 per cent of the income gap currently seen in northern and southern Italy.

Professor Pascali said: 'Although Jewish pawnshops disappeared over time, the Monti di Pietà have survived to the present day and gave rise to a significant portion of contemporary Italian banks.

'My results confirm that the level of local banking development during the Renaissance (proxied by the presence of a Monte di Pietà or a Jewish pawnshop) had strong causal effects on the current availability of credit in Italian municipalities.'

He added similar trends to those that occurred in Italy will also likely to have happened in other countries in Europe when Jewish communities were expelled in the Middle Ages.