From Finance to Fascism: the Real Effect of Germany's 1931 Banking Crisis
53 Pages Posted: 26 Mar 2018 Last revised: 16 Jun 2020
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From Finance to Fascism
Date Written: March 2018
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 pre-trends 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.
Keywords: extremism, financial crises, Germany, Great Depression, Nazi Party, Polarisation, Real effects
Suggested Citation: Suggested Citation
Stefan Gissler
Board of Governors of the Federal Reserve System ( email )
20th Street and Constitution Avenue NW
Washington, DC 20551
United States
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From Finance to Fascism: the Real Effect of Germany's 1931 Banking Crisis
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