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SUMMARY:Predicting the Past: Understanding the Causes of Bank Distress in 
 the Netherlands in the 1920s - Professor Abe de Jong\, RSM Erasmus Univers
 ity
DTSTART:20130610T160000Z
DTEND:20130610T180000Z
UID:TALK42709@talks.cam.ac.uk
CONTACT:D'Maris Coffman
DESCRIPTION:Christopher L. Colvin (Queen’s University Management School\
 , Queen’s University Belfast)\, Abe de Jong (Rotterdam School of Managem
 ent\, Erasmus University) and Philip T. Fliers (Rotterdam School of Manage
 ment\, Erasmus University)\n\nWhy do some banks fail in financial crises w
 hile others survive? This paper answers this question by analysing the con
 sequences of the Dutch financial crisis of the 1920s for 143 banks of whic
 h 37 banks failed. Banks’ choices in balance sheet composition\, corpora
 te governance practices and shareholder liability regimes were found to ha
 ve a significant impact on their chances of experiencing distress. Banks b
 ore a higher probability of failing if\, on the eve of the crisis\, they: 
 were highly performing\; were highly leveraged\; had fewer interlocking di
 rectorates with non-banks\; and concentrated their managerial interlocks w
 ith highly profitable banks. Banks which chose to adopt shareholder liabil
 ity regimes with unpaid capital were more likely to experience distress\, 
 but could mitigate this risk by keeping higher portions of their equity un
 paid. Receiver operating characteristic analysis shows that interlock char
 acteristics in particular have a high predictive power.
LOCATION:Lucia Windsor Room\, Newnham College
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