Working Paper: CEPR ID: DP12806
Authors: Hansjoachim Voth; Sebastian Doerr; Stefan Gissler; Jos Luis Peydr
Abstract: Do financial crises radicalize voters? We study Germany's 1931 banking crisis, collecting new data on bank branches and firm-bank connections of over 5,500 firms. Exploiting cross-sectional variation in pre-crisis exposure to failing banks, we show that Nazi votes surged in locations more affected by the financial crisis. Radicalization in response to the shock was exacerbated in cities with a history of anti-Semitism. After the Nazis seized power, both pogroms and deportations were more frequent in places affected by the banking crisis. Our results suggest an important synergy between financial distress and cultural predispositions, with far-reaching consequences.
Keywords: financial crisis; political extremism; populism; antisemitism; culture; great depression
JEL Codes: E44; G01; G21; N20; P16
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| financial crisis in 1931 (G01) | support for the Nazi Party (F52) |
| exposure to the failing Danatbank (F65) | support for the Nazi Party (F52) |
| financial crisis in 1931 + preexisting antisemitism (N23) | radicalization of the electorate (D72) |
| financial crisis in 1931 (G01) | pogroms and deportations of Jews (P37) |
| antisemitism (J71) | radicalization in response to financial crisis (F65) |