Unlimiting Unlimited Liability
Legal Equality for Swedish Banks with Alternative Shareholder Liability Regimes, 1897–1903
Bibliographic Data
| ID | 9625162 |
|---|---|
| Authors | Susan Kenny (0000-0003-1603-3563, TD Bank, corresponding author), Seán Kenny, Anders Ögren (0000-0001-5758-7509, Uppsala University) |
| Year | 2021 |
| Volume | 95 |
| Issue | 2 |
| Pages | 193-218 |
| Publication date | 2021-01-01 |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | The Business History Review (JOURNAL) |
| Journal identifiers | ISSN: 0007-6805 • E-ISSN: 2044-768X |
| Publisher | Cambridge University Press (CUP) (PUBLISHER) |
| DOI | 10.1017/s0007680521000192 |
| OpenAlex | W3182324965 |
| Language | EN |
| Citations received | 3 |
| References cited | 9 |
This article examines the aftermath of the 1897 Riksbank Act in Swedish banking. The act placed banks with unlimited liability and those with limited liability on equal footing, removing the note-issuing privileges of the former. We consider whether changes in risk preferences occurred subsequent to the act, or whether extended liability was a sufficient deterrent. We conclude that when legal differences were removed, lower transaction costs for unlimited liability banks (ULBs) spurred aggressive competition, reflected in narrower interest spreads relative to limited liability banks (LLBs). ULBs also took on greater leverage and held less liquidity, which supports the Coasean interpretation that the shareholder liability regime mattered little. After 1897, ULB shareholders continued to receive higher dividends, enjoyed substantially superior returns on equity, and maintained an array of corporate governance controls to shield themselves against their additional risk
Business · Corporate governance · Dividend · Economics · Equity (law · Law and economics · Leverage (statistics · Liability · Limited liability · Market liquidity · Political science · Shareholder · Banking stability, regulation, efficiency · Corporate Finance and Governance · Finance · Global Financial Crisis and Policies · Law
| Citations per year | 1 |
|---|---|
| Citation span | 2023 - 2026 (4) |
| Highly cited | No |