Survival and Growth in Joint-Stock Banking Oligopolies. Lessons from the Crises of 1917-1923 on the Role of Competitors and Politics

The Italian joint-stock banking system has faced three main crises: in 1897, with the demise of Societa Generale Italiana di Credito Mobiliare (Pantaleoni, 1936); in 1921-1923, with the crisis of two of the four main joint-stock banks, Banca Italiana di Sconto (Falchero, 1990) and Banco di Roma (De'; Stefani, 1960; De Rosa, 1982-1983); and, in 1931-1933, with the disappearance of both the renewed Banco di Roma and the remaining two joint-stock banks, Banca Commerciale Italiana and Credito Italiano (De Rosa, 1982-1983; Confalonieri, 1994). After a brief examination of the nature of the Italian banking system on the eve of the First World War and the post-war economic situation, this paper examines in detail the crisis of the 'mixed' banking system in Italy of 1921-1923. The problems faced by the Banca Italiana di Sconto and the Banco di Roma are interpreted from the perspectives of oligopoly theory and the influence of politics. This approach is informed by a new reading of the documentary evidence, integrated with unpublished or neglected material. The paper also considers the role of the State, in relation to special legislation, and the macroeconomic costs suffered by the Treasury, together with the problems of the equilibria of joint-stock banking, banking liquidity, inter-bank competition, and monetary politics, both during and after the crises. The paper concludes with some lessons that can be learnt from the crises in terms of economic policy, primarily in the banking and monetary fields, in the light of the interactions with the political world.