This paper explores the origins of German banks’ risk-taking in the years preceding the 1931 crisis. The 1920s were marked by a large and prolonged increase in capital flows into Germany, chiefly from the United States and the United Kingdom. This coincided, at the individual bank level, with a rise in leverage and a fall in liquidity. We examine possible connections between the two phenomena. Our analysis is based on a combination of historiographical work and statistical modelling based on a newly hand-collected bimonthly dataset on German reporting banks from 1925 to 1935. Bank by bank we examine the effects of foreign inflows on decisions related to leverage, lending, and liquidity. The Dawes Plan of 1924 and the relative absence of a too-big-to-fail (TBTF) environment allow us to mitigate endogeneity concerns. We suggest that while capital inflows did not seem to impact banks’ liquidity decisions, their impact on leverage was non-negligeable.

中文翻译：

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热钱流入和银行冒险：德国从 20 年代到大萧条

本文探讨了 1931 年危机之前德国银行承担风险的根源。 20 年代的特点是流入德国的资本大量且长期增加，主要来自美国和英国。在个别银行层面，这与杠杆率上升和流动性下降同时发生。我们研究这两种现象之间可能存在的联系。我们的分析基于史学工作和统计模型的结合，该模型基于新近手工收集的 1925 年至 1935 年德国报告银行的双月数据集。流动性。 1924 年的道斯计划和相对缺乏“太大而不能倒”(TBTF) 的环境使我们能够减轻内生性担忧。我们认为，虽然资本流入似乎并未影响银行的流动性决策，但其对杠杆率的影响却不可忽视。