Compound Interest Origins

About Compound Interest Origins

The concept of compound interest, where interest is charged on accumulated interest, was known to ancient Babylonian mathematicians but developed mathematically in medieval Italy. Fibonacci discussed compound interest in his 1202 book Liber Abaci. The Catholic Church condemned charging interest as usury, pushing lending into Jewish and Lombard communities. By the 16th century, practical necessity overcame religious objections. Jacob Bernoullis discovery of the mathematical constant e in 1683 provided the foundation for continuous compounding. Richard Witt published Arithmeticall Questions in 1613, the first book entirely devoted to compound interest. Modern finance, from mortgages to pension funds, depends on compound interest calculations.