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London merchant banks, the central European panic and the sterling crisis of 1931

Accominotti, Olivier (2012) London merchant banks, the central European panic and the sterling crisis of 1931. Journal of Economic History, 72 (1). pp. 1-43. ISSN 0022-0507

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Identification Number: 10.1017/S0022050711002427


The Central European panic of the spring 1931 is often presented as a cause of the sterling crisis of September. But what was the transmission channel? This article explores how the continent's financial troubles affected Britain's banking system. The freeze of Central European assets created a liquidity strain for London merchant banks because they had accepted (guaranteed) the commercial bills of German merchants. I use new balance sheet data to quantify this shock and explore how the liquidity crisis contributed to the sterling crisis. The evidence demonstrates that international contagion was crucial in transmitting the 1931 global financial crisis.

Item Type: Article
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Additional Information: © 2012 Cambridge University Press
Divisions: Economic History
Subjects: D History General and Old World > DA Great Britain > DAW Central Europe
H Social Sciences > HC Economic History and Conditions
JEL classification: N - Economic History > N2 - Financial Markets and Institutions > N24 - Europe: 1913-
Sets: Departments > Economic History
Collections > Economists Online
Date Deposited: 03 Sep 2012 08:31
Last Modified: 20 Oct 2020 03:03

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