Holding Bankers Liable: Personal Guarantees and Risk-taking in Security Underwriting - with Peter Koudijs
Does additional liability for bank executives improve risk management? We address this question using uniquely detailed data on the underwriting activities of one of the largest Dutch banks in the early 20th century. Its executives faced additional liability as they personally guaranteed part of their banks’ security underwriting. If the issuance was successful, they received the underwriting fee; if it failed, they had to purchase securities at a loss. Exploiting exogenous discontinuities in the size of these guarantees, we find that issuance quality was higher for larger guarantees. Investor subscription rates were higher, issuing firms had stronger balance sheets, issuing governments had higher debt capacity, and subsequent security returns were higher. Results indicate that additional liability directly tied to executives' decisions can help reduce bank risk-taking.
Presentations: Federal Reserve Financial and Monetary History Conference (2026), CEPR International Macro-History Online Seminar Series (2025), IBEFA WEAI Summer Meeting (2025), Sveriges Riksbank Conference 'Monetary and Financial History: Lessons for the 21st Century' (2024), Finance & History Workshop 200 Years Brussels Stock Exchange (2024), Groningen Summer School 'Financial, Economic and Business History' (2024), Groningen Growth and Development Centre Conference (2024), ERIM Finance PhD Seminar (2024), ESE PhD Seminar (2024).
Competing for Deposits: Historical Evidence from the Depository of Last Resort
The Dawn of Deposit Banking in the Netherlands - with Remo Oostdam