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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Detalles Bibliográficos
Autor: Jorge-Sotelo, Enrique
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)
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network_acronym_str ES
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repository_id_str
spelling Goodbye connections, hello Bagehot: democratization, lender of last resort independence and bank failures in Spain in 1931Jorge-Sotelo, EnriqueCatalunyaRepública Catalana, 1931Fallides bancàriesHistòria econòmicaEspanyaBancs de liquidacióCataloniaCatalan Republic, 1931Bank failuresEconomic historySpainClearinghouses (Banking)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.Wiley2026info:eu-repo/semantics/articleinfo:eu-repo/semantics/acceptedVersionapplication/pdfhttps://hdl.handle.net/2445/226491Articles publicats en revistes (Història Econòmica, Institucions, Política i Economia Mundial)reponame:Dipòsit Digital de la UBinstname:Universidad de BarcelonaInglésVersió postprint del document publicat a: https://doi.org/10.1111/ehr.70001Economic History Review, 2026, vol. 79, num.1, p. 89-132https://doi.org/10.1111/ehr.70001(c) Economic History Society, 2026info:eu-repo/semantics/embargoedAccessoai:diposit.ub.edu:2445/2264912026-05-27T06:46:51Z
dc.title.none.fl_str_mv Goodbye connections, hello Bagehot: democratization, lender of last resort independence and bank failures in Spain in 1931
title Goodbye connections, hello Bagehot: democratization, lender of last resort independence and bank failures in Spain in 1931
spellingShingle Goodbye connections, hello Bagehot: democratization, lender of last resort independence and bank failures in Spain in 1931
Jorge-Sotelo, Enrique
Catalunya
República Catalana, 1931
Fallides bancàries
Història econòmica
Espanya
Bancs de liquidació
Catalonia
Catalan Republic, 1931
Bank failures
Economic history
Spain
Clearinghouses (Banking)
title_short Goodbye connections, hello Bagehot: democratization, lender of last resort independence and bank failures in Spain in 1931
title_full Goodbye connections, hello Bagehot: democratization, lender of last resort independence and bank failures in Spain in 1931
title_fullStr Goodbye connections, hello Bagehot: democratization, lender of last resort independence and bank failures in Spain in 1931
title_full_unstemmed Goodbye connections, hello Bagehot: democratization, lender of last resort independence and bank failures in Spain in 1931
title_sort Goodbye connections, hello Bagehot: democratization, lender of last resort independence and bank failures in Spain in 1931
dc.creator.none.fl_str_mv Jorge-Sotelo, Enrique
author Jorge-Sotelo, Enrique
author_facet Jorge-Sotelo, Enrique
author_role author
dc.subject.none.fl_str_mv Catalunya
República Catalana, 1931
Fallides bancàries
Història econòmica
Espanya
Bancs de liquidació
Catalonia
Catalan Republic, 1931
Bank failures
Economic history
Spain
Clearinghouses (Banking)
topic Catalunya
República Catalana, 1931
Fallides bancàries
Història econòmica
Espanya
Bancs de liquidació
Catalonia
Catalan Republic, 1931
Bank failures
Economic history
Spain
Clearinghouses (Banking)
description 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.
publishDate 2026
dc.date.none.fl_str_mv 2026
dc.type.none.fl_str_mv info:eu-repo/semantics/article
info:eu-repo/semantics/acceptedVersion
format article
status_str acceptedVersion
dc.identifier.none.fl_str_mv https://hdl.handle.net/2445/226491
url https://hdl.handle.net/2445/226491
dc.language.none.fl_str_mv Inglés
language_invalid_str_mv Inglés
dc.relation.none.fl_str_mv Versió postprint del document publicat a: https://doi.org/10.1111/ehr.70001
Economic History Review, 2026, vol. 79, num.1, p. 89-132
https://doi.org/10.1111/ehr.70001
dc.rights.none.fl_str_mv (c) Economic History Society, 2026
info:eu-repo/semantics/embargoedAccess
rights_invalid_str_mv (c) Economic History Society, 2026
eu_rights_str_mv embargoedAccess
dc.format.none.fl_str_mv application/pdf
dc.publisher.none.fl_str_mv Wiley
publisher.none.fl_str_mv Wiley
dc.source.none.fl_str_mv Articles publicats en revistes (Història Econòmica, Institucions, Política i Economia Mundial)
reponame:Dipòsit Digital de la UB
instname:Universidad de Barcelona
instname_str Universidad de Barcelona
reponame_str Dipòsit Digital de la UB
collection Dipòsit Digital de la UB
repository.name.fl_str_mv
repository.mail.fl_str_mv
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score 15,812429

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