The Austrian banking crisis of 1931: a reassessment

Abstract

The current literature on the causes of the Austrian financial crisis in 1931 emphasises both foreign and domestic factors. This article offers new data to analyse this issue. Its findings reinforce the importance of a domestic factor in bringing about the crisis: universal banks’ exposure to industrial enterprises, which were the universal banks’ main borrowers and creditors. During the 1920s, these industrial enterprises failed to perform well, rendering the universal banks insolvent. The Credit-Anstalt, which became an ‘acquirer of last resort’ for three other universal banks during the 1920s, was insolvent as early as 1925. The bank, however, could have avoided bankruptcy had it been spared the burden of Unionbank's non-performing assets.

Past and present financialization in Central Eastern Europe: the case of Western subsidiary banks

“…65 The main example was the largest Austrian Hungarian Creditanstalt which thanks to its expansion into the Successor States to the Empire and a series of forced mergers was rescued by the Austrian government as one of the main historical example of 'acquirer of last resort'. 66 Fast forward decades later, the very same Creditanstalt was the first Western bank to re-establish its presence in CEE. 67 Throughout the transition, this was followed by the entrance of Austrian banking groups such as Raiffeisen ZentralBank (RZB), Erste, and Austria Bank (which took over Creditanstalt) after merging with German bank HVO, later acquired by Italian Unicredit in the region.…”