Suchergebnisse

In interwar Italy, at least six major episodes of banking crises required the intervention of monetary authorities to bail out, restructure, or liquidate distressed intermediaries. The five large universal banks rescued in the systemic crisis of 1930–1 jointly accounted for one‐third of the total assets of the banking system. What made Italian leading banks so prone to crises? This article suggests that their fragility was ultimately caused by governance failures, both public and private, that enhanced excess risk‐taking. Empirical evidence is consistent with theoretical insights according to which the potential for moral hazard and conflict of interest, endemic in universal banking, can be magnified when banks enter into long‐run relationships with firms and base their growth strategy on the pursuance of monopolistic rents. Interwar Italy emerges as a case in which an insider system devoid of the disciplinary devices provided by sound governance institutions created perverse incentives and weakened the resilience of the banking system to adverse macroeconomic shocks.

Paper presented at: The Sixth Conference of the European Historical Economics Society (EHES), Istanbul, September 9-10, 2005 ; Securities markets in Continental Europe remained relatively underdeveloped throughout the 20th century as compared with those of Anglo-Saxon countries. The "law and finance" strand of literature argues that their secular stagnation can be traced back to legal origins and explained in terms of path dependency. Recent studies, however, provide ample evidence that the long-term development pattern of securities markets in Europe was not monotonical, but rather followed the ebb and flow of globalization. In fact, capital markets were well developed in a number of civil law countries on the eve of WW1. According to Rajan and Zingales, a "Great Reversal" occurred in the interwar period, from which financial markets did not fully recover until the 1990s. The paper argues that this view of a long-term U-shaped pattern does not reflect accurately the historical experience of European securities markets. In fact, a W-shaped pattern can be observed: securities markets noticeably recovered in the 1960s, only to be marginalized again in the 1970s and early 80s, until financial reforms allowed them eventually to thrive later in the same decade. The paper explains this post-war reversal with the rise of encompassing regimes of financial repression in many Western European countries, of which the underdevelopment of securities markets was one, but hardly the only facet. An index measuring the intensity of financial repression, covering both banking intermediation and capital markets, is constructed for a panel of 16 European countries in the period 1950-1991. The determinants of financial repression are then empirically assessed by using panel data which control for a wide set of fiscal, institutional and political variables. Results point to a public finance explanation of the reversal, according to which financial repression was basically motivated by governments' attempt to impose implicit taxation on domestic currency- and debt-holders, including their banking systems.

An early draft was presented at the 5th World Cliometrics Conference (Venice, July 2004) ; Securities markets in Continental Europe remained relatively underdeveloped throughout the 20th century as compared with those of Anglo-Saxon countries. The "law and finance" strand of literature argues that their secular stagnation can be traced back to legal origins and explained in terms of path dependency – ie, due to the lower protection of shareholders' and debtors' rights guaranteed by commercial codes based on the civil law tradition. Recent studies, however, provide ample evidence that the long-term development pattern of securities markets in Europe was not monotonical, but rather follows the ebb and flow of globalization. In fact, capital markets were well developed in a number of civil law countries on the eve of WW1. A "Great Reversal" occurred in the interwar period, from which they did not recover fully until the 1990s. The paper argues that this view of a longterm U-shaped pattern does not reflect accurately the historical experience of European securities markets. In fact, a W-shaped pattern can be observed: securities markets noticeably recovered in the 1960s, before being again marginalized in the 1970s and 80s. The paper attempts to explain this "Little Reversal" within the context of the rise of financial repression regimes in Western Europe. The paper tests empirically the public finance hypothesis, which argues that financial repression is motivated by the government's attempt to impose implicit taxation on domestic currency- and debt-holders, including the banking system. An index measuring the intensity of financial repression is constructed for a panel of 16 European countries in the period 1950-1991. The determinants of financial repression are then empirically investigated using cross-section time-series data for a set of economic, institutional and political variables.

This article review: Wirtschaftspolitik nach dem Ende der Bretton-Woods-Ära. Jahrbuch für Wirtschaftsgeschichte. 2002/1. pp. 269.

After significant headway towards liberalization of capital movements in the early 1960s, European governments resorted massively to capital controls in the turmoil of the demise of the Bretton Woods system. In some countries (Italy among others), what looked like a temporary backlash against incipient financial globalisation caused an escalation of domestic and external controls, leading to a comprehensive and long-lasting regime of financial repression. Why financial repression was so hard to dismantle, in spite of its widely recognized distortionary impact? Why did governments stick so long to sub-optimal policy instruments? By concentrating on the Italian case, this paper argues that a public finance approach may provide an answer to such questions. More specifically, following the literature on the political economy of capital controls and the fiscal implications of financial repression, the paper suggests that policies increasing revenues from implicit taxation may be regarded as an attempt to postpone the structural change in the established fiscal policy regime that capital liberalization necessarily entailed. As capital controls (and financial repression, more generally) substantially contributed to ease the government's budget constraint under conditions of structural deficit and rapidly rising debt, liberalization was expected to exacerbate fiscal problems. The paper illustrates the policy measures deployed to increase seigniorage revenues, grant implicit subsidies to the government and enforce financial protectionism. It also provides for the first time an estimation of the economic relevance of revenues from financial repression, which proved to be of a magnitude comparable to revenues from seigniorage. High revenues from implicit taxation (relative to GDP) can be considered a rough approximation of the cost of financial liberalization and may explain why the process of financial reform was slow and controversial.

Over the second half of the 20th century, Greek governments failed to tax business income in line with the country's level of economic development. This paper uses the "slippery slope" model of tax compliance to explain why the reform of income and corporate taxation in the late 1950s met strong resistance in the business sector. We argue that the negative legacy of interwar reforms, the lack of sustained and credible investment in trust building in coincidence with the postwar reforms, and the intensification of coercive threats in tax enforcement led to an antagonistic tax climate and a degradation of enforced and voluntary compliance. Our qualitative analysis based on original primary sources shows that the arguments publicly voiced by entrepreneurs and their organizations reflected their persistent perception of tax power as unfair, arbitrary and extractive. Using aggregate tax returns data, our quantitative analysis finds evidence of systematic and increasing income underreporting both by unincorporated and incorporated businesses. This vicious circle of non-cooperation and mutual distrust explains why governments got trapped into a persistent low tax capacity equilibrium that still casts a shadow on the Greek economy.

Abstract
We study how Spanish equity investors assessed firms' exposure to political risk during the regime change of the 1930s. We show that shifts in political uncertainty regularly predicted a general deterioration of future investment opportunities in the stock market. However, we also find that firms differed in their sensitivity to uncertainty, reflecting important differences in their perceived exposures to political risk. The negative impact of uncertainty was significantly milder for firms with political connections to republican parties. The price of some stocks increased in periods of heightened uncertainty, thus allowing investors to hedge against reinvestment risk. In the case of firms that became targets of hostile political actions, we observe that investors frequently adjusted their assessment of individual stocks to changes in firm-specific political circumstances. Over the whole period of the Second Republic, investors' systematic preference for safer equity hedges led to a continuous decline in the price of stocks perceived as more exposed to political risk.