Not a bad idea, but not entirely foolproof. They were, in other words, in default . Some of the loans were eventually returned, but a lot of investors lost a lot of money. Not too different from what is happening today. Money can be lent and borrowed in all sorts of ways.
Banks are just one source - but they have always been an important part of the picture.
The first bankers seem to have got into the business almost by accident. These were goldsmiths back in the seventeenth century. They had gold deposited with them for safe-keeping and they issued receipts in return. At first such receipts carried the name of the owner of the gold. Other people were then prepared to accept receipts alone in exchange for goods - since this would give them a claim on the gold.