IDEAS home Printed from https://ideas.repec.org/p/ehl/lserod/87151.html
   My bibliography  Save this paper

The Austrian banking crisis of 1931: one bad apple spoils the whole bunch

Author

Listed:
  • Macher, Flora

Abstract

The current literature is inconclusive on the relative importance of foreign and domestic factors in bringing about the Austrian financial crisis in 1931. This paper offers new data to bring further clarity to this issue and emphasises the importance of a domestic factor: universal banks’ exposure to industrial enterprises. Industrial enterprises were the universal banks’ main borrowers and creditors. During the 1920s they did not perform well, and made the universal banks insolvent. The Credit-Anstalt, which became an ‘acquirer of last resort’ for weak universal banks during the 1920s, may have avoided its own demise had it been spared of one bank’s, the Unionbank’s assets.

Suggested Citation

  • Macher, Flora, 2018. "The Austrian banking crisis of 1931: one bad apple spoils the whole bunch," LSE Research Online Documents on Economics 87151, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:87151
    as

    Download full text from publisher

    File URL: http://eprints.lse.ac.uk/87151/
    File Function: Open access version.
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Postel-Vinay, Natacha, 2016. "What Caused Chicago Bank Failures in the Great Depression? A Look at the 1920s," The Journal of Economic History, Cambridge University Press, vol. 76(2), pages 478-519, June.
    2. Eichengreen, Barry, 2016. "Hall of Mirrors: The Great Depression, the Great Recession, and the Uses-and Misuses-of History," OUP Catalogue, Oxford University Press, number 9780190621070, Decembrie.
    3. Douglas W. Diamond & Raghuram G. Rajan, 2005. "Liquidity Shortages and Banking Crises," Journal of Finance, American Finance Association, vol. 60(2), pages 615-647, April.
    4. Douglas W. Diamond & Philip H. Dybvig, 2000. "Bank runs, deposit insurance, and liquidity," Quarterly Review, Federal Reserve Bank of Minneapolis, vol. 24(Win), pages 14-23.
    5. Feinstein, Charles H. & Temin, Peter & Toniolo, Gianni, 2008. "The World Economy between the World Wars," OUP Catalogue, Oxford University Press, number 9780195307559, Decembrie.
    6. Eichengreen, Barry, 1996. "Golden Fetters: The Gold Standard and the Great Depression, 1919-1939," OUP Catalogue, Oxford University Press, number 9780195101133, Decembrie.
    7. Harold James, 1992. "Financial flows across frontiers during the interwar depression," Economic History Review, Economic History Society, vol. 45(3), pages 594-613, August.
    8. Whale, Philip Barrett, 1930. "Joint Stock Banking in Germany: A Study of the German Creditbanks before and after the War," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, number whale1930.
    9. Peter Temin, 2008. "The German crisis of 1931: evidence and tradition," Cliometrica, Journal of Historical Economics and Econometric History, Association Française de Cliométrie (AFC), vol. 2(1), pages 5-17, April.
    10. Postel-Vinay, Natacha, 2016. "What caused Chicago bank failures in the Great Depression? A look at the 1920s," LSE Research Online Documents on Economics 88844, London School of Economics and Political Science, LSE Library.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. repec:ehl:wpaper:87151 is not listed on IDEAS
    2. Olivier Accominotti, 2019. "International banking and transmission of the 1931 financial crisis," Economic History Review, Economic History Society, vol. 72(1), pages 260-285, February.
    3. Todd Messer, 2022. "Financial Failure and Depositor Quality: Evidence from Building and Loan Associations in California," International Finance Discussion Papers 1354, Board of Governors of the Federal Reserve System (U.S.).
    4. Grodecka-Messi, Anna & Kenny, Seán & Ögren, Anders, 2021. "Predictors of bank distress: The 1907 crisis in Sweden," Explorations in Economic History, Elsevier, vol. 80(C).
    5. Jenter, Dirk & Aldunate, Felipe & Korteweg, Arthur & Koudijs, Peter, 2021. "Shareholder Liability and Bank Failure," CEPR Discussion Papers 16309, C.E.P.R. Discussion Papers.
    6. Cont, Rama & Kotlicki, Artur & Valderrama, Laura, 2020. "Liquidity at risk: Joint stress testing of solvency and liquidity," Journal of Banking & Finance, Elsevier, vol. 118(C).
    7. Nobel Prize Committee, 2022. "Financial Intermediation and the Economy," Nobel Prize in Economics documents 2022-2, Nobel Prize Committee.
    8. Ho, Tai-kuang & Yeh, Kuo-chun, 2019. "Were capital flows the culprit in the Weimar economic crisis?," Explorations in Economic History, Elsevier, vol. 74(C).
    9. Mitchener, Kris & Richardson, Gary, 2020. "Contagion of Fear," CEPR Discussion Papers 14510, C.E.P.R. Discussion Papers.
    10. Seán Kenny & Anders Ögren & Liang Zhao, 2023. "The highs and the lows: bank failures in Sweden through inflation and deflation, 1914–1926," European Review of Economic History, European Historical Economics Society, vol. 27(2), pages 223-249.
    11. Stephen Morris & Hyun Song Shin, 2004. "Liquidity Black Holes," Review of Finance, Springer, vol. 8(1), pages 1-18.
    12. Fratianni, Michele & Giri, Federico, 2017. "The tale of two great crises," Journal of Economic Dynamics and Control, Elsevier, vol. 81(C), pages 5-31.
    13. Sebastian Doerr & Stefan Gissler & José-Luis Peydró & Hans-Joachim Voth, 2018. "From finance to fascism," Economics Working Papers 1651, Department of Economics and Business, Universitat Pompeu Fabra, revised Nov 2020.
    14. Zhiguo He & Arvind Krishnamurthy, 2013. "Intermediary Asset Pricing," American Economic Review, American Economic Association, vol. 103(2), pages 732-770, April.
    15. Acharya, Viral & Yorulmazer, Tanju, 2003. "Information Contagion and Inter-Bank Correlation in a Theory of Systemic Risk," CEPR Discussion Papers 3743, C.E.P.R. Discussion Papers.
    16. van Eeghen, Piet-Hein, 2021. "Funding money-creating banks: Cash funding, balance sheet funding and the moral hazard of currency elasticity," International Review of Financial Analysis, Elsevier, vol. 76(C).
    17. Raddatz, Claudio & Schmukler, Sergio L., 2012. "On the international transmission of shocks: Micro-evidence from mutual fund portfolios," Journal of International Economics, Elsevier, vol. 88(2), pages 357-374.
    18. Sebastian Doerr & Stefan Gissler & José‐Luis Peydró & Hans‐Joachim Voth, 2022. "Financial Crises and Political Radicalization: How Failing Banks Paved Hitler's Path to Power," Journal of Finance, American Finance Association, vol. 77(6), pages 3339-3372, December.
    19. Nicholas Crafts & Peter Fearon, 2010. "Lessons from the 1930s Great Depression," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 26(3), pages 285-317, Autumn.
    20. Nathalie Janson, 2009. "Internet Banking and the question of Bank Run: lesson from the Northern Rock Bank case," Post-Print hal-00555630, HAL.
    21. Sviatlana Hlebik, 2017. "Liquidity Risk under The New Basel Global Regulatory Framework," Applied Economics and Finance, Redfame publishing, vol. 4(6), pages 78-90, November.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • N24 - Economic History - - Financial Markets and Institutions - - - Europe: 1913-

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ehl:lserod:87151. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: LSERO Manager (email available below). General contact details of provider: https://edirc.repec.org/data/lsepsuk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.