The Credit-Anstalt Crisis of 1931Austria played a prominent role in the worldwide events of 1931 as the largest bank in Central and Eastern Europe, the Viennese Credit-Anstalt, collapsed and led Europe into a financial panic that spread to other parts of the world. The events in Austria were pivotal to the economic developments of the 1930s, yet the literature about them is sparse. This book tries to fill this gap. Aurel Schubert analyzes the crisis using the leading theories of financial crises, identifies the causes of the crisis, examines the market's efficiency in predicting events, analyzes how the crisis was transmitted to the real sector, and studies the behavior of the Austrian as well as international authorities as lenders of last resort. His main conclusion is that even sixty years after the crisis, many of its lessons are still valid. Managerial and regulatory deficiencies led to the collapse of the bank; the subsequent currency crisis was not an irrational and unexplainable panic by a confused public, but rather a rational response to inconsistencies in policy; and the reactions of the largely unprepared authorities--in Austria as well as abroad--did not help in resolving the crisis quickly. |
Contents
1 Introduction | 1 |
2 Diary of the crisis | 7 |
3 Financial crisis theories and the Austrian experience of 1931 | 19 |
4 The causes of the financial crisis | 31 |
5 The financial crisis and market efficiency | 65 |
6 The financial crisis and economic activity | 98 |
7 The financial crisis and the lender of last resort | 141 |
8 Alternative policies and policy implications | 168 |
9 Conclusions | 185 |
| 191 | |
| 203 | |
Other editions - View all
Common terms and phrases
100 million schillings adjusted amount announcement Anstalt assets Austrian banks Austrian currency Austrian government Austrian National Bank Austrian schilling balance sheet bank failures bank's banking crisis banking panic banking sector behavior bills capital causes central bank changes collapse countries Credit-Anstalt crisis crises currency crisis current account debt decline deposits discount domestic Economist effects efficiency events of 1931 exchange rate financial crisis foreign creditors foreign exchange foreign exchange market foreign reserves Germany gold guarantee high-powered money hyperinflation hypothesis illiquid increased industry insolvency institutions interest rates interwar issue June Kernbauer Kindleberger last resort League of Nations lender of last lending liabilities liquidity loan LofN losses million schillings monetary monetary base money demand money stock occurred percent period portfolio potential problems rediscounting reduced reported role Rothschild Schwartz shares stability Table trade United Vienna Viennese banks Wall Street Journal Wiener Börsen-Kurier