Goodbye connections, hello Bagehot: democratization, lender of last resort independence and bank failures in Spain in 1931
Did democratization reduce the likelihood of politically connected bank bailouts in the past? What role did private central banks play as independent lenders of last resort? To answer these questions, this article provides new detailed archival evidence on the causes of bank failures in Spain in Jul...
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| Tipo de recurso: | artículo |
| Estado: | Versión aceptada para publicación |
| Fecha de publicación: | 2026 |
| País: | España |
| Institución: | Universidad de Barcelona |
| Repositorio: | Dipòsit Digital de la UB |
| OAI Identifier: | oai:diposit.ub.edu:2445/226491 |
| Acceso en línea: | https://hdl.handle.net/2445/226491 |
| Access Level: | acceso embargado |
| Palabra clave: | Catalunya República Catalana, 1931 Fallides bancàries Història econòmica Espanya Bancs de liquidació Catalonia Catalan Republic, 1931 Bank failures Economic history Spain Clearinghouses (Banking) |
| Sumario: | Did democratization reduce the likelihood of politically connected bank bailouts in the past? What role did private central banks play as independent lenders of last resort? To answer these questions, this article provides new detailed archival evidence on the causes of bank failures in Spain in July 1931. We show how, on the back of a safety net provided by close connections to the Primo de Rivera dictatorship (1923–30), bankers embarked in a rapid and outward-oriented expansion characterized by politically driven credit misallocation and risk-shifting on the eve of the Great Depression. Transition to democracy with the coming of the Spanish Second Republic in April 1931 terminated the safety net provided by these connections and the collapse of international trade and finance caused insolvency to surface. Democratic fiscal authorities clashed with the opposition of Banco de España – the privately owned lender of last resort – to share losses stemming from a bailout, resulting in bank failures. |
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