In order to protect the financial system from excessive risk-taking, many argue that bank managers need to have more personal liability. However, whether the liability of bank managers has a significant effect on risk-taking is an open question. This column studies a unique historical episode in which similar bankers, operating in similar institutional and economic environments, faced different degrees of personal liability, depending on the timing of their marriages, and finds that limited liability induced bankers to take more risks.
Most Read
Vox eBooks
Vox Talks
Events
-
15 - 15 March 2019 / London, Royal Society / UK Network of Environmental Economists (UKNEE)
-
28 - 29 March 2019 / European Central Bank, Frankfurt / European Central Bank and the University of Ohio
-
28 - 29 March 2019 / Paris / SUERF - The European Money and Finance Forum Banque de France (BDF)
-
16 - 17 May 2019 / University of Minho, Guimarães, Portugal / School of Engineering, University of Minho
-
10 - 10 June 2019 / DePaul University, Chicago, IL (USA) / MoFiR and DePaul University
