The Austrian banking crisis of 1931:a reassessment

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.