Seminario académico de Finanzas y Contabilidad

22 de noviembre, 13:00 horas, sala P307, Facultad de Economía y Negocios

Título: How do liability rules influence a bank’s response to a crisis? Evidence from the Great Depression

Expositor: Felipe Aldunate, profesor Asistente de la Escuela de Administración de la Pontificia Universidad Católica de Chile

At the onset of the Great Depression most bank shareholders in the United States were subject to double liability. In case of a bank failure, shareholders subject to double liability could not only lose their equity, but an additional amount equal to the par value of their shares. Using hand collected data for individual banks and exploiting cross sectional and within state variation in bank shareholders’ liability we study the consequences of double liability. We find that banks subject to double liability were more likely to survive until 1933, and that double liability did not hinder banks' ability to raise new capital during the crisis.