Pre-1921 Danat exposure predicts identical effects to later connections.

Evidence

Danat expanded geographically in the 1920s. Perhaps, while the average firm associated with it was no riskier than those linked to other banks, new clients were less stable in unobservable ways? To examine this issue, we construct measures of firmand city-level exposure based on bank-firm connections and branch networks before 1921. In that year, Danat emerged from a takeover of Darmst¨adter Bank by the Nationalbank. Danat’s regional expansions began only thereafter. We find near-identical effects of 1921-involvement with Danat on firms’ wages, as well as on city-level output and voting. Similarly, cities with and without Danat exposure exhibit no significant differences in economic conditions between 1929 and 1930 and 1930 and 1931, that is, during the early years of Germany’s Great Depression and prior to the banking crisis. — Sebastian Doerr et al., Financial Crises and Political…, 35

Categorization

• QUESTION: Key identification check: pre-crisis (pre-1921) connections give the same results, so selection into riskier clients post-merger is not driving it.
• XREF: connects to: The Danat-radicalization result survives many robustness checks. — Sebastian Doerr et al., Financial Crises and Political…, 39; Continuous exposure measures confirm Danat exposure boosted Nazi voting — Sebastian Doerr et al., Financial Crises and Political…, 104; Danat exposure caused worsening unemployment only after the bank failed — Sebastian Doerr et al., Financial Crises and Political…, 146 (+1 more)

Broader Connections

• Continuous exposure measures confirm Danat exposure boosted Nazi voting #corroborates (0.85) — Sebastian Doerr et al., Financial Crises and Political…, 104
• Danat exposure caused worsening unemployment only after the bank failed #complicates (0.80) — Sebastian Doerr et al., Financial Crises and Political…, 146