Slovenian banks during Great Depression

Žarko Lazarevic
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Žarko Lazarevic: Institute for Contemporary History, Slovenia

No 9, SEEMHN papers from National Bank of Serbia

Abstract: The interwar period represents a turning point for both the Slovenian and Yugoslav banking. During that time Slovenia had a functionally comprehensive banking system. Schematically, joint-stock banks primarily emphasised the entrepreneurial sector as its target group, while the credit cooperatives (an important banking institution in Slovenia) mostly covered the needs of the rural population through their elaborate network. Savings banks, established by the local authorities (in Yugoslavia these banks were specific for the Slovenian banking) often engaged in business relations with their founders and urban small and medium-sized businesses. In the 1930s, with the onset of the Great Depression and the all-encompassing lack of trust, the business success indicators worsened dramatically. In consequence, the savings deposits in Slovenia decreased by a third, and the regression continued further as the population transferred their deposits to banks offering state guarantee. During the crisis the banks had to write off a significant percentage of their capital; each year they reduced the volume of loans they provided to the economy, and hence their total assets were also reduced. On the other hand, due to the general feeling of uncertainty in times of crisis, the banks increased (almost doubled) their cash holdings. The situation improved in the second half of the 1930s through active state policy and the measures undertaken for the rehabilitation of the banking system. However, not even right before World War II was the Slovenian banking restored to its pre-crisis level in terms of scale of operations, acquired resources, volume of loans and amount of return. As at the Yugoslav level, the significance of state banks, which started to replace the private banking sector, also rose in Slovenia.

Keywords: : Slovenia; Yugoslavia; banks; banking; Great Depression (search for similar items in EconPapers)
Pages: 22 pages
Date: 2009-03
Note: The paper was presented at the Fourth Annual SEEMHN Conference hosted by the National Bank of Serbia, 27 March 2009 in Belgrade.
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