What is the joint impact of different resolution regimes and capital requirements on the optimal liability structure of …

Does enhanced shareholder liability reduce bank failure? We compare the performance of around 4,200 state …-regulated banks of similar size in neighboring U.S. states with different liability regimes during the Great Depression. The distress … rate of limited liability banks was 29% higher than that of banks with enhanced liability. Results are robust to a diff …

Prior to the Great Depression, regulators imposed double liability on bank shareholders to ensure financial stability … and protect depositors. Under double liability, shareholders of failing banks lost their initial investment and had to pay … up to the par value of the stock in order to compensate depositors. We examine whether double liability was effective at …