The Caskets story appears in the Gesta Romanorum, a collection of tales dating in England from the thirteenth century. Its editor, Herrtage, describes it as a 'collection of fictitious narratives in Latin, compiled from Oriental apologues, monkish legends, classical stories, tales of chroniclers, popular traditions, and other sources, which it would be now difficult and perhaps impossible to discover.' An English translation was well known in Shakespear's day, and this book may have been the source of the Caskets plot in The Merchant of Venice.
Shakespeare may have invented the Lorenzo—Jessica love story; some think he obtained it from a tale by Massuccio di Salerno, cir. 1470, but I doubt it.
In addition to these probable and possible sources, Gosson, in his Schoole of Abuse (1579), mentions a play acted at the Bull Inn, called The Jew. From his brief description of it, many editors have been convinced that this drama is the prototype of Shakespeare’s play, and the real source; but as no copy of it has yet been found, all statements concerning it are largely conjecture.
Shakespeare was undoubtedly influenced by Marlowe's tragedy of blood, The Jew of Malta, which was written sometime between 1589 and 1593, and was immensely popular, as it deserved to be. This Jew was a monster rather than a human being; but he was certainly the most famous Jew on the Elizabethan stage until the first matinée of The Merchant of Venice. His daughter similarly loves a Christian youth, throws down moneybags from a balcony at night, and ultimately flees from home; and her father's combination of parental and financial emotion infallibly suggests Shylock's ejaculations.
Dr. Johnson, as quoted by Furness, made an epitome of Il Pecorone, from which the following extracts are here given (Giannetto=Bassanio; Ansaldo=Antonio):
