Dictatorship, authoritarian regime, and the banking sector in Yugoslavia during the 1930s

In the 1930s, the Yugoslav state was shaped by two decisive events with far-reaching consequences. The establishment of the dictatorship on January 6, 1929, fundamentally changed the political life of the country, while the economy was affected by the Great Depression. Yugoslavia belonged to the group of Central and Eastern European countries that abandoned the liberal-democratic model and slipped into dictatorship. At the same time, it was also an example of a dysfunctional political system that could not find the necessary consensus on the country’s development model within the framework of parliamentary life. The “pretext” for the introduction of dictatorship was political instability, which reached its peak only after ten years of the state’s existence and threatened its survival. Then, the Great Depression shook the country’s economic system to the core. This chapter looks at efforts to resolve these dilemmas using the example of banking regulation – within the framework of the dictatorship and authoritarian regime of the 1930s, of course. The first argument is that the introduction of dictatorship for banking or financial policy was not a critical development in terms of the banking regulatory system. The continuity of concepts and practices was maintained. However, the real turning point came with the arrival of the Great Depression, which hit Yugoslavia with a little delay. It set in when the dictatorship was already on its way to becoming an authoritarian regime and was seeking the broader social (political) support it needed to consolidate its legitimacy. Under these exceptional circumstances, the government policy was redesigned. Economic recovery became a precondition for political stabilization. Thus, the “justification” for the dictatorship shifted from the political to the economic sphere. The crisis management of society and the economy gradually came to the fore.