Predictors of Bank Distress: The 1907 Crisis in Sweden

Research output: Working paper

Abstract

This paper contributes to literature on bank distress using the Swedish experience of the in- ternational crisis of 1907, often paralleled with 2008. By employing previously unanalyzed bank-level data, we use logit regressions and principal component analysis to measure the im- pact of pre-crisis bank characteristics on the probability of their subsequent distress. The crisis was characterized by “creative destruction,” as those banks with weaker corporate governance structures, wider branching networks, operating with lower cost efficiency were more likely to experience distress. We find that poor credit allocation rather than foreign borrowing, as often stressed, were associated with ultimate demise.

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Research areas and keywords

Subject classification (UKÄ) – MANDATORY

  • Economic History

Keywords

  • Bank Distress, Financial Crises, Swedish Banks, Lender of Last Resort, E58, G21, G28, H12, N23
Original languageEnglish
Number of pages55
StatePublished - 2018
Publication categoryResearch

Publication series

NameLund Papers in Economic History. General Issues
PublisherDepartment of Economic History, Lund University
No.2018:180

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