Levantine banking and finance
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Levantine banking and finance is banking and financing activity in Levantia that is thought to comply with principles of Christian ethics. Many of the basic institutions and methods of Levantine finance originate during the medieval period, with financiers developing methods which complied with the Catholic Church's prohibition on usury. While defining interest payments as usury has become an item of theological and financial dispute, Levantine finance, when possible, avoids all use of interest payments, instead relying on alternative methods for financiers to lend money at profit.
Levantine banking and finance rules largely originated within the Holy Levantine Empire, and accordingly its principles remain widely used and adhered to within the Levantine Union. Its application outside the Union varies, ranging from strict adherence within the Nysdra Sea Treaty Association countries to loose adherence within Burgundie's overseas territories, with limited application to nations on Levantia outside of the Union.
History
- Crusades and orders as banks
- Pharisedoms as havens from usury in the 1600-1700s and Burgundies divergence from "Christian banking"
Principles
Scriptural and theological basis
Historic prohibitions on usury
Payment tiers
Most types of financial instruments and contracts within Levantine banking employ lump sum payments in the form of upfront payments for loan servicing or a convenience fee during some part of the life of a loan. The fees and payments are based on industry-wide scales, called "payment tiers", where the principle of a loan is subject to a certain tier of payment (i.e. loans under $1000 are subject to $125 in upfront costs) that scale up.
Legal enforcement
Products, services, and contracts
Profit and loss sharing
Lump sum models
Lump sum models are financial instruments wherein the borrower pays a specific tiered amount of money for their loan to a financial institution that represents a payment not for the loan itself but for the loan servicing that the institution undertakes; it is a payment for the institution for providing the services of the transaction and for incurring risk.
Upfront payments
Upfront payments are the most common form of lump sum loan payment, requiring borrowers to pay a lump sum at the time the loan is commenced.
Deferred upfront payments
Deferred upfront payments are loans wherein the same terms and basic structure of an upfront payment occurs, except that the lump sum upfront payment is rendered at the completion of the loan rather than at its beginning. These types, which incur larger lump sums than the normal upfront payment model, are common among large corporations; financiers are more comfortable with their ability to pay, and corporations prefer them as they have typically already begun to collect on the investment made with the loan, using the resulting profits to pay off the lump sum.
Convenience fees
Convenience fees are a type of lump sum model where the borrower - typically an individual or small business - will pay the flat, payment-tier appropriate fee on a monthly basis for a limited time during the duration of the loan, typically the first twelve months over the life of the loan. This model allows some flexibility for those who cannot afford upfront payments for certain kinds of loans.