Do financial crises radicalize voters? We study Germanyâ 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 â but not in those suffering from the other bankâ s failure. Unobservables or pre-trends do not ...
Do financial crises radicalize voters? We study Germanyâ 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 â but not in those suffering from the other bankâ s failure. Unobservables or pre-trends do not explain the results. Danatbankâ 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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