Perspectives on Canadian Bank Insolvency during the 1930s: A Comment

Lawrence Kryzanowski and Gordon Roberts

Journal of Money, Credit and Banking, 1999, vol. 31, issue 1, 130-36

Abstract: Jack Carr, Frank Mathewson and Neil Quigley (1995) (CMQ) introduce new archival evidence to challenge the hypothesis that Canadian banks enjoyed considerable capital forbearance during the 1930s (Lawrence Kryzanowski and Gordon S. Roberts, 1993) (KR). This note examines what the CMQ evidence has to tell us once opportunity-cost valuation and agency costs in government and the accounting profession are stirred vigorously into the inferential stew. The authors show that none of the CMQ findings is inconsistent with the original KR argument on capital forbearance. More broadly, they demonstrate how serious economic error can result from taking accounting and contractual formalisms at their face value.

Date: 1999
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Persistent link: https://EconPapers.repec.org/RePEc:mcb:jmoncb:v:31:y:1999:i:1:p:130-36

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