A banking crisis isn’t just bad for business, it can also poison politics
Financial crises are a really bad idea. We learned that in the UK with the 2008 banking crisis. It doubled our national debt and was followed by a decade of lost earnings growth. But banks going under contributes to grim politics, too.
That’s the lesson from some economic and political history contained in new Bank for International Settlements’ research. It examines Germany’s 1931 banking crisis and the link to the rise of the Nazis. In July that year, the country’s second largest bank – Danatbank – failed, triggering a bank run, financial crisis and big income falls.
Areas whose firms were most exposed to Danatbank saw bigger economic declines. But those cities also saw larger increases in the Nazi vote share in 1932. While other banks went
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