This article analyzes the evolution of banking supervision in Spain under Franco’s regime (1939–1975), highlighting how political and economic factors shaped oversight in an authoritarian setting. Two phases emerge. In the 1940s–50s, supervision—lodged in the Ministry of Finance—was weak, poorly staffed, and focused on enforcing banks’ oligopolistic interest rate agreements, reflecting regulatory capture. Following the 1959 Stabilization Plan, rising external pressure, domestic concerns about oligopolistic practices, and the 1962 Banking Law prompted reform. Supervision shifted to the Bank of Spain with the establishment of the Private Banking Inspection Service, resulting in more frequent inspections and gradual formalization of supervision. Archival records indicate that by the 1970s, inspections had become more frequent and rigorous, signaling a cautious shift toward risk-based oversight. However, the reforms remained incomplete. Persistent systemic vulnerabilities culminated in the severe banking crisis of 1977–1982, underlining the limitations of supervisory transformation under authoritarian rule.

In 1962, Spain implemented significant banking law changes to boost competition. This study investigates their impact on provincial banking concentration from 1964 to 1975, utilising novel provincial-level private bank balance sheet data and including savings banks. Results show a substantial decline in concentration across most provinces. Panel data models identify the determinants of banking concentration: larger populations and higher gross domestic product per capita correlate with lower concentration, while agrarian-focused provinces exhibit higher concentration. The provincial financial sector’s structure also matters, with a higher number of branches and headquarters per capita associated with reduced banking concentration. These findings refine existing literature and provide new insights into the intricate relationship between banking concentration and regional economies in Spain.

This paper focusses on the financial relations between the banking sector and the Treasury in Modern Spain. Tax systems have been insufficient, generating a chronic budget deficit. This drove to irresponsible public debt management, being the State a serial defaulter until 1987. This prevented the budget deficits could be financed by sovereign debt issued on the stock exchanges, and forced the state to resort to banks (public and private). The new series of public debt banks portfolios evolution is explained by their pursuit of returns and by changes in banking regulation and financial repression, which favoured the banking status quo. The paper analyses the causes of banking regulation, derived from the public borrowing policy and also from the banking lobbying strategy. It examines the consequences of the deadly banking-state embrace which brought about the interconnection between fiscal and banking crises.