Preserving Financial Stability in Times of Crisis. A Tale of Two Public Banks: Monte dei Paschi di Siena and Banco di Sicilia, 1929-1940

In this paper, we present different models of banking strategies followed by two major Italian public banks in the 1930s. Monte dei Paschi di Siena and Banco di Sicilia are interesting case studies for a number of reasons: their strong regional connections; their long-standing struggle for political independence from national monetary authorities; their common attempt to modify the scale and scope of their business with the creation of integrated groups; the early internationalization of activities. In the paper we examine how the two banks were affected by (and involved in) the major financial and economic crisis of the 1930s and show how their strategies and models of banking were altered by the external shocks. At the same time, we reconstruct the role played by banking authorities and other important stakeholders.