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From finance to fascism: the real effect of Germany's 1931 banking crisis


Voth, Hans-Joachim; Doerr, Sebastian; Gissler, Stefan; Peydró, José Luis (2020). From finance to fascism: the real effect of Germany's 1931 banking crisis. CEPR Discussion Papers 12806, Centre for Economic Policy Research.

Abstract

Do financial crises radicalize voters? We study Germany's banking crisis of 1931, when two major banks collapsed and voting for radical parties soared. We collect new data on bank branches and firm-bank connections of 5,610 firms. Incomes plummeted in cities affected by the bank failures; connected firms curtailed payrolls. Nazi votes surged in locations exposed to Danatbank, led by a Jewish manager - but not in those suffering from the other bank's failure. Unobservables or pretrends do not explain the results. Danatbank's collapse boosted Nazi support, especially in cities
with deep-seated anti-Semitism, suggesting a synergy between cultural and economic channels.

Abstract

Do financial crises radicalize voters? We study Germany's banking crisis of 1931, when two major banks collapsed and voting for radical parties soared. We collect new data on bank branches and firm-bank connections of 5,610 firms. Incomes plummeted in cities affected by the bank failures; connected firms curtailed payrolls. Nazi votes surged in locations exposed to Danatbank, led by a Jewish manager - but not in those suffering from the other bank's failure. Unobservables or pretrends do not explain the results. Danatbank's collapse boosted Nazi support, especially in cities
with deep-seated anti-Semitism, suggesting a synergy between cultural and economic channels.

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Additional indexing

Item Type:Working Paper
Communities & Collections:03 Faculty of Economics > Department of Economics
Dewey Decimal Classification:330 Economics
JEL Classification:E44, G01, G21, N20, P16
Uncontrolled Keywords:Financial crises, real effects, extremism, polarisation, Nazi Party, Great Depression, Germany
Language:English
Date:10 June 2020
Deposited On:11 Feb 2020 14:02
Last Modified:12 Feb 2021 13:53
Series Name:CEPR Discussion Papers
Number of Pages:50
ISSN:0265-8003
Additional Information:Revised version
OA Status:Green
Official URL:https://cepr.org/active/publications/discussion_papers/dp.php?dpno=12806

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