From Finance to Fascism - 2020 - Peking University HSBC Business School(PHBS)

From Finance to Fascism

by Hans-Joachim Voth, University of Zurich

Wednesday, November 25, 2020 | 4:00pm - 5:30pm | ZOOM, Room 331

Abstract

Do financial crises radicalize voters? We study the 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.

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