Corporate governance and risk management at unprotected banks: National banks in the 1890s

Charles W. Calomiris and Mark Carlson

Journal of Financial Economics, 2016, vol. 119, issue 3, 512-532

Abstract: We examine bank governance and risk choices from the 1890s, a period without distortions from deposit insurance or other government assistance to banks. We link differences in managerial ownership to different corporate governance policies, risk, and methods of risk management. Formal corporate governance and high manager ownership are negatively correlated. Managerial salaries and self-lending are greater when managerial ownership is higher and lower when formal governance is employed. Banks with high managerial ownership (low formal governance) target lower default risk. High managerial ownership, not formal governance, is associated with greater reliance on cash instead of equity to limit risk.

Keywords: Manager ownership; Corporate governance; Rent seeking; Risk preferences; Bank failures (search for similar items in EconPapers)
JEL-codes: G21 G32 N21 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (27)

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Related works:
Working Paper: Corporate Governance and Risk Management at Unprotected Banks: National Banks in the 1890s (2014)
Working Paper: Corporate Governance and Risk Management at Unprotected Banks: National Banks in the 1890s (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:119:y:2016:i:3:p:512-532

DOI: 10.1016/j.jfineco.2016.01.025

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