Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. 2 Terms of use: Documents in EconStor may Non-technical summaryDuring the last decades, several emerging market economies have experienced a banking crisis together with a sudden stop. In most of these cases national governments and national central banks adopted several types of interventions to fight the crisis. In this paper we analyze an early example of twin-crisis, which occurred in the 1860s in Spain. The episode is particularly interesting due to the decentralized nature of the Spanish banking system of that time.We document how, at the beginning of the 1860s, Spain experienced a large and relatively quick inflow of foreign capital followed by a sudden stop in the middle of the decade. In the following years the Spanish economy was hit by a severe banking and economic crisis with GDP falling by more than 10% in 1868 and half of the Spanish banks going bankrupt in the years between 1865 and 1870.We argue that the main reason of the stop in capital inflows is the international financial crisis of 1864-66. This was a major crisis that affected most European economies and provoked the fall of one of the largest London banks, Overend, Gurney and Co., which was followed by the 'Black Friday' of May 1866, a massive financial panic in the City of London that quickly spread to other countries in Europe. We collect new empirical evidence supporting our claim: capital inflows were abruptly interrupted from 1864 to 1867, in line with a current account correction during the same period and two recessions, a softer one in 1865 and a more severe one in 1868. We document how the two main financial shocks, those of 1864 and 1866, were coincident with large financial panicsacross Europe.We also analyze the microeconomic behavior of individual banks of issue in facing the crisis. To this end we construct a database with information about the balance sheets of the banks of issue. We regard this as a natural experiment in which all banks operating under a common regulatory and economic environment face a common aggregate financial shock represented by the twin-crisis. We find that three out of twelve banks of issue existing before the crisis were liquidated due to it. In these cases the direct exposure to unprofitable railways projects or the involvement with investment banks that were bankrupted during the crisis are the main causes of the liquidation. In contrast, a number of banks of issue experienced an improvement in their balance sheet position during the crisis...
RESUMENLos cambios institucionales que definieron la revolución liberal en Occidente tuvieron efectos positivos sobre el crecimiento económico. La igualdad de los individuos ante la ley, la simplificación de la administración de justicia, la definición clara de los derechos de propiedad y la apertura del mercado contribuyeron a una rápida aproximación entre las expectativas de una mayor rentabilidad individual y el logro del incremento de rentabilidad social. En el presente artículo se examituí el cambio institucional operado en la España del siglo xix, y se concluye con la afirmación de que los defectos en su práctica no aportaron todas las consecuencias favorables al crecimiento económico que cabía esperar del nuevo sistema. ABSTRACTThe institutional changes which emerged £rom the liberal revolution of Western Europe were beneficia! for economic growth. Equality before the law, the simplification of the judiciary, the defining of dearet property rights, and the opening of the market all contributed to a rapid approximation of the expected improvements in prí-vate retums with the increase in social retums. This article examines the institutional changes that took place in nineteenth century Spain, and concludes that deficiencies in the carrying out of the reforms produced smaller gains for economic growth than might have been expected.
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