Olivier Accominotti (LSE): Global Banking and Crisis Propagation: Evidence from the 1931 Financial Crash

Abstract: How did the 1931 financial crisis propagate internationally? This paper compares the effect of the Central European panic of the summer 1931 on the US and British banking systems. I rely on new archival data and document a key difference between the United States and Britain in how Central European credits were distributed across banks. In Britain, most of the lending to Central Europe was done by small banks with high levels of exposure relative to their capital. In the United States, most of the lending to Central Europe was done by big banks with low levels of exposure relative to their capital. The freeze of Central European assets therefore left many more British banks insolvent than US banks. The structure of informational asymmetries within the banking system accounts for the distribution of German credits in both countries. This explains why the Central European crisis propagated to London and not New York in the summer of 1931.

 
Thursday, April 24, 2014 - 13:00 to 14:45

Olivier Accominotti is Assistant Professor of Economic History at the London School of Economics and CEPR research affiliate. He holds a PhD in economics from Sciences Po Paris and was previously a postdoctoral fellow at Princeton University, a Fulbright scholar at the University of California, Berkeley and a visiting researcher at the European University Institute in Florence. His current projects focus on currency markets and the propagation of financial crises during the Great Depression. For some of his contributions to recent debates see: http://www.voxeu.org/person/olivier-accominotti

In 2011 he received the prestigious Alexander Gerschenkron Prize for the Best Dissertation in Non-North-American Economic (The Economic History Association) and also the Gino Luzzatto Prize for the Best Dissertation in European Economic History (European Historical Economics Society).

He has published together with Barry Eichengreen and Marc Flandreau and published among others

  • "London Merchant Banks, the Central European Panic and the Sterling Crisis of 1931", The Journal of Economic History, forthcoming.
  • "The Sterling Trap: Foreign Reserves Management at the Bank of France, 1928-1936", European Review of Economic History, vol. 13:3 (December 2009), pp. 349-376.
  • "The Spread of Empire: Clio and the Measurement of Colonial Borrowing Costs" (with Marc Flandreau and Riad Rezzik), The Economic History Review, vol. 64: 2 (May 2011), pp. 385-407.
  • "Black Man's Burden, White Man's Welfare: Control, Devolution and Development in the British Empire, 1880-1913" (with Marc Flandreau, Riad Rezzik and Frédéric Zumer), European Review of Economic History, vol. 14:1 (April 2010), pp. 47-70.
  • "Bilateral Treaties and the Most-Favored Nation-Clause: The Myth of Trade Liberalization in the Nineteenth Century" (with Marc Flandreau), World Politics, vol. 60:2 (January 2008), pp. 147-188.
The page was last edited by: Department of Management, Politics and Philosophy // 04/23/2014