Predictors of Bank Distress : The 1907 Crisis in Sweden
(2021) In Explorations in Economic History 80.- Abstract
- This paper studies the Swedish experience of the international crisis of 1907, which is often compared with the crisis of 2008. By constructing a new dataset from previously unanalyzed monthly bank-level data, we document high-frequency changes in bank outcomes throughout the 1907 crisis. While distressed banks suffered substantial withdrawals of foreign funds and liquid domestic liabilities, we show that banks’ asset structures, along with observable fundamentals and institutional characteristics, played a more significant role in their subsequent fate. Higher shares of non-performing assets and lending against equities were the most important balance sheet predictors of distress. These balance sheet fundamentals, as well as over-extended... (More)
- This paper studies the Swedish experience of the international crisis of 1907, which is often compared with the crisis of 2008. By constructing a new dataset from previously unanalyzed monthly bank-level data, we document high-frequency changes in bank outcomes throughout the 1907 crisis. While distressed banks suffered substantial withdrawals of foreign funds and liquid domestic liabilities, we show that banks’ asset structures, along with observable fundamentals and institutional characteristics, played a more significant role in their subsequent fate. Higher shares of non-performing assets and lending against equities were the most important balance sheet predictors of distress. These balance sheet fundamentals, as well as over-extended branch networks, significantly shortened the lifespan of Swedish banks in the aftermath of the 1907 crisis. (Less)
Please use this url to cite or link to this publication:
https://lup.lub.lu.se/record/bbc0f582-6ac7-4551-9bd3-a8c08aa5e5a0
- author
- Grodecka-Messi, Anna LU ; Kenny, Seán LU and Ögren, Anders LU
- organization
- publishing date
- 2021
- type
- Contribution to journal
- publication status
- published
- subject
- keywords
- Bank Distress, Financial Crises, Swedish Banks, Lender of Last Resort, Bank Run, Distress Predictors
- in
- Explorations in Economic History
- volume
- 80
- article number
- 101380
- publisher
- Elsevier
- external identifiers
-
- scopus:85094893822
- ISSN
- 0014-4983
- DOI
- 10.1016/j.eeh.2020.101380
- language
- English
- LU publication?
- yes
- id
- bbc0f582-6ac7-4551-9bd3-a8c08aa5e5a0
- date added to LUP
- 2020-09-11 10:05:10
- date last changed
- 2022-04-19 00:39:21
@article{bbc0f582-6ac7-4551-9bd3-a8c08aa5e5a0,
abstract = {{This paper studies the Swedish experience of the international crisis of 1907, which is often compared with the crisis of 2008. By constructing a new dataset from previously unanalyzed monthly bank-level data, we document high-frequency changes in bank outcomes throughout the 1907 crisis. While distressed banks suffered substantial withdrawals of foreign funds and liquid domestic liabilities, we show that banks’ asset structures, along with observable fundamentals and institutional characteristics, played a more significant role in their subsequent fate. Higher shares of non-performing assets and lending against equities were the most important balance sheet predictors of distress. These balance sheet fundamentals, as well as over-extended branch networks, significantly shortened the lifespan of Swedish banks in the aftermath of the 1907 crisis.}},
author = {{Grodecka-Messi, Anna and Kenny, Seán and Ögren, Anders}},
issn = {{0014-4983}},
keywords = {{Bank Distress; Financial Crises; Swedish Banks; Lender of Last Resort; Bank Run; Distress Predictors}},
language = {{eng}},
publisher = {{Elsevier}},
series = {{Explorations in Economic History}},
title = {{Predictors of Bank Distress : The 1907 Crisis in Sweden}},
url = {{http://dx.doi.org/10.1016/j.eeh.2020.101380}},
doi = {{10.1016/j.eeh.2020.101380}},
volume = {{80}},
year = {{2021}},
}