Paper #1651

Títol:

From finance to fascism

Autors:

Sebastian Doerr, Stefan Gissler, José-Luis Peydró i Hans-Joachim Voth

Data:

Març 2018

Resum:

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 over 5,500 firms and show that incomes plummeted in cities affected by the bank failures; connected firms curtailed their payrolls. We further establish that Nazi votes surged in locations exposed to failing Danatbank, led by a prominent Jewish manager and targeted by anti-Semitic Nazi propaganda. Our results suggest a synergy between cultural and economic factors: Danatbank's collapse boosted Nazi support especially in cities with deep-seated anti-Semitism; and the Nazis gained few additional votes in cities exposed to collapsing Dresdner Bank, which was not the target of Nazi hate speech. Danat-exposed and non-exposed cities were similar in their pre-crisis characteristics and exhibited no differential pre-trends; firms borrowing from Danat had lower leverage before the crisis than other firms. Unobservables are unlikely to account for the results.

Paraules clau:

Financial crises, banking, Great Depression, democracy, anti-Semitism

Codis JEL:

E44, G01, G21, N20, P16.

Àrea de Recerca:

Macroeconomia i Economia Internacional / Economia Política

Publicat a:

Journal of Finance, 77(6), December 2022, 2993-3425. DOI: https://doi.org/10.1111/jofi.13166
Amb el títol:
‘Financial Crises and Political Radicalization: How Failing Banks Paved Hitler's Path to Power’

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