Financial echoes: the European banking crisis of 1931 in the Argentine mirror

Abstract

This article examines the repercussions of the European banking crises of 1931 on Argentina’s banking sector, emphasizing the role of European banks with branches in the country. While existing literature has focused on the spread of financial instability in Europe and the United States, little attention has been given to the effects on developing economies. Argentina, a key destination for European capital, provides a compelling case study. Using balance sheets, financial statements and archival evidence, this study explores how European banks acted as conduits for the transmission of the 1931 crisis. As parent banks in Europe faced strain, their Argentine affiliates experienced significant deposit withdrawals and were forced to revise their balance sheet strategies, heightening vulnerability within Argentina’s banking system. The findings highlight the broader consequences of global financial integration and suggest that the ripple effects of the European meltdown prolonged recessionary pressures in Argentina, altering lending practices long after the initial shock. This research contributes to the historiography of interwar banking, offering a deeper understanding of the dynamics between European and developing economies during the Great Depression, and underscores the need for further exploration of financial instability in peripheral regions.