Perspectives on Canadian Bank Insolvency During the 1930s

Posted: 4 Sep 1998

See all articles by Lawrence Kryzanowski

Lawrence Kryzanowski

Concordia University, Quebec - John Molson School of Business

Gordon S. Roberts

York University - Schulich School of Business

Abstract

Carr, Mathewson and Quigley (1995) (CMQ) introduce new archival evidence to challenge the hypothesis that Canadian banks enjoyed considerable capital forbearance during the 1930s (Kryzanowski and 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. We show that none of the CMQ findings is inconsistent with the original KR argument on capital forbearance. More broadly, we demonstrate how serious economic error can result from taking accounting and contractual formalisms at their face value.

JEL Classification: N22

Suggested Citation

Kryzanowski, Lawrence and Roberts, Gordon S., Perspectives on Canadian Bank Insolvency During the 1930s. Journal of Money, Credit, and Banking, Vol. 31, No. 1, February 1999. Available at SSRN: https://ssrn.com/abstract=121454

Lawrence Kryzanowski (Contact Author)

Concordia University, Quebec - John Molson School of Business ( email )

1455 de Maisonneuve Blvd. W.
Montreal, Quebec H3G 1M8
Canada

Gordon S. Roberts

York University - Schulich School of Business ( email )

4700 Keele Street
Toronto, Ontario M3J 1P3
Canada
416-736-2100 x77953 (Phone)
416-736-5687 (Fax)

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