Danat’s 1920s lending expansion did not select riskier borrowers

Evidence

Table 10 examines whether cities with a presence of Danatbank already experienced a sharper downturn in economic activity in the early phase of the Great Depression, that is, before July 1931. To this end, it reports results for variations of our baseline regression (see equation (2)), where the outcome variables are different measures of unemployment (in levels or changes) at the city level. Column (1) shows that cities with a Danat presence did not see a statistically significant change in the unemployment rate from 1929 to 1930, relative to cities with no Danat presence. Column (2) reports a similar result for the change in the unemployment rate from 1930 to 1931. Column (3) shows that there were also no significant differences in the 1930 unemployment rate across cities with and without Danat’s presence. — Sebastian Doerr et al., Financial Crises and Political…, 144 (#corroborates, via linked claim)

To further investigate whether exposure to Danat could have had differential effects based on cities’ pre-banking crisis economic trajectory, columns (4) and (5) interact danat with the 1929 to 1930 and 1930 to 1931 change in the unemployment rate. In both columns, the coefficient on danat remains economically and statistically significant and positive. The interaction effects of the measures of economic activity with danat have no significant effect on support for the NSDAP. Finally, we investigate to what extent exposure to Danat affected economic outcomes in 1931 and 1932. While there are no data on city incomes in 1930 or 1931, there is data on the unemployment rate for 1931 and 1932. Column (6) shows that exposure to Danat has a significant positive effect on the change in the unemployment rate from 1931 to 1932. In other words, not only did cities exposed to Danatbank see a decline in incomes, but they also experienced an increase in unemployment. Taken together, these results suggest that the presence of Danat in a city was not associated with worse initial economic conditions, but a steeper economic decline only after Danat failed. — Sebastian Doerr et al., Financial Crises and Political…, 146 (#expands, via linked claim)

Categorization

• XREF: connects to: Danat exposure caused worsening unemployment only after the bank failed — Sebastian Doerr et al., Financial Crises and Political…, 146; Danat-exposed cities had no pre-crisis unemployment divergence from other cities — Sebastian Doerr et al., Financial Crises and Political…, 144

Related

• Danat-exposed cities had no pre-crisis unemployment divergence from other cities (similarity 0.95)
• Exposure to Danat predicted worsening unemployment only after the bank’s failure. (similarity 0.94)
• Danat exposure caused worsening unemployment only after the bank failed (similarity 0.94)
• Danat-exposed cities showed no sharper pre-July-1931 unemployment downturn than other cities. (similarity 0.93)
• Nazi gains in exposed cities appeared only after the banking crisis, not before. (similarity 0.88)
• Danat-exposed cities did not differ systematically on observable characteristics. (similarity 0.88)
• Pre-1921 Danat exposure predicts identical effects to later connections. (similarity 0.87)
• Nazi gains in Danat-exposed cities emerged only after the bank’s collapse (similarity 0.84)
• Danatbank-exposed cities saw a 2.9-percentage-point extra rise in Nazi vote share. (similarity 0.84)
• Danat exposure raised Nazi voting 1.7 to 2.5 percentage points across robustness checks. (similarity 0.83)
• Exposure to Danatbank failure raised Nazi vote shares by roughly 3 percentage points (similarity 0.82)
• Continuous exposure measures confirm Danat exposure boosted Nazi voting (similarity 0.82)
• Nazi vote share gained an extra 2.5 percentage points in Danat-exposed cities. (similarity 0.82)
• Income effects rely on long differences plus a parallel-trends unemployment check. (similarity 0.81)
• Danatbank exposure raised Nazi vote share across multiple federal elections. (similarity 0.79)

Broader Connections

• Danat exposure caused worsening unemployment only after the bank failed #expands (0.85) — Sebastian Doerr et al., Financial Crises and Political…, 146
• Danat-exposed cities had no pre-crisis unemployment divergence from other cities #corroborates (0.85) — Sebastian Doerr et al., Financial Crises and Political…, 144