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Predictors of Bank Distress : The 1907 Crisis in Sweden

Grodecka, Anna LU ; Kenny, Sean LU and Ögren, Anders LU (2018) In Lund Papers in Economic History. General Issues
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.
Please use this url to cite or link to this publication:
author
; and
organization
publishing date
type
Working paper/Preprint
publication status
published
subject
keywords
Bank Distress, Financial Crises, Swedish Banks, Lender of Last Resort, E58, G21, G28, H12, N23
in
Lund Papers in Economic History. General Issues
issue
2018:180
pages
55 pages
language
English
LU publication?
yes
id
926313ea-8f00-4403-b386-1454d22499f1
date added to LUP
2018-10-11 13:45:21
date last changed
2025-04-04 14:53:42
@misc{926313ea-8f00-4403-b386-1454d22499f1,
  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.}},
  author       = {{Grodecka, Anna and Kenny, Sean and Ögren, Anders}},
  keywords     = {{Bank Distress; Financial Crises; Swedish Banks; Lender of Last Resort; E58; G21; G28; H12; N23}},
  language     = {{eng}},
  note         = {{Working Paper}},
  number       = {{2018:180}},
  series       = {{Lund Papers in Economic History. General Issues}},
  title        = {{Predictors of Bank Distress : The 1907 Crisis in Sweden}},
  url          = {{https://lup.lub.lu.se/search/files/52874299/LUP_180_rev.pdf}},
  year         = {{2018}},
}