scholarly journals Credit Relationships and Business Bankruptcy during the Great Depression

2017 ◽  
Vol 9 (2) ◽  
pp. 228-255 ◽  
Author(s):  
Mary Eschelbach Hansen ◽  
Nicolas L. Ziebarth
Keyword(s):  
Financial Crisis ◽  
Geographical Distribution ◽  
Great Depression ◽  
Financial Distress ◽  
Natural Experiment ◽  
Credit Rating ◽  
Credit Rating Agency ◽  
The Great Depression ◽  
Bankruptcy Rate

Credit relationships are sticky. Stickiness makes relationships beneficial to borrowers in times of their own distress but makes them potentially problematic when lenders themselves face hardship. To examine the role of credit relationships during a financial crisis, we exploit a natural experiment in Mississippi during the Great Depression that generated plausibly exogenous differences in financial distress for banks. Using new data drawn from the publications of the credit rating agency Dun & Bradstreet and from original bankruptcy filings, we show that financial distress increased business exit but did not increase the bankruptcy rate. Financial distress caused both banks and trade creditors to recalibrate their collections strategies, which is revealed by changes in the geographical distribution of the creditors of bankrupt businesses. (JEL G21, G24, G33, N12, N22, N82)

Evaluating Proposed Remedies for Credit Rating Agency Failures

2014 ◽  
Vol 89 (4) ◽  
pp. 1399-1420 ◽  
Author(s):  
S. Jane Jollineau ◽  
Lloyd J. Tanlu ◽  
Amanda Winn
Keyword(s):  
Financial Crisis ◽  
Credit Rating ◽  
Credit Ratings ◽  
Quantitative Model ◽  
Securities And Exchange Commission ◽  
Data Availability ◽  
Rating Agencies ◽  
Credit Rating Agency ◽  
Rating Agency

ABSTRACT: Regulators and the financial press have criticized credit rating agencies (CRAs) for exacerbating the financial crisis by providing overly optimistic debt ratings. Allegedly, CRAs departed from their quantitative models in order to please security issuers with higher credit ratings. In response, the Dodd-Frank Act of 2010 required the Securities and Exchange Commission to conduct a study on alternative models for compensating CRAs. We conduct an experiment exploring how the credit ratings of M.B.A. students, who assume the role of credit rating analysts, are affected by two proposals for reform: (1) changing who pays the CRAs, and (2) requiring analysts to justify departures from a quantitative model. We find that credit ratings are highest when the borrower pays CRAs for ratings and a justification requirement is not in place. Implementing either proposed reform independently reduces credit ratings, but credit ratings are not further reduced when both reforms are implemented together. Data Availability: Data are available from the authors upon request.

scholarly journals The Global Financial Crisis

2019 ◽  
pp. 94-112
Author(s):  
Edward Fieldhouse ◽  
Jane Green ◽  
Geoffrey Evans ◽  
Jonathan Mellon ◽  
Christopher Prosser ◽  
...  
Keyword(s):  
Financial Crisis ◽  
Great Depression ◽  
Global Financial Crisis ◽  
British Politics ◽  
Voting Behaviour ◽  
Political Opportunity ◽  
The Great Depression ◽  
Economic Vote ◽  
The Global Financial Crisis ◽  
Economic Competence

The Global Financial Crisis, which began in 2007–8, was the most significant financial crisis since the Great Depression of the 1930s, and acted as a large shock to British politics. The economic vote is usually thought about as a short-term mechanism: a reward or punishment for the incumbent depending on recent economic conditions. In this chapter we examine how this shock played a role in the outcome of the 2015 General Election, seven years after the crisis began. The Global Financial Crisis continued to affect voting behaviour in 2015 for two reasons: first, it did long-lasting damage to perceptions of Labour’s economic competence, and second, it created a political opportunity for the Conservatives to blame the previous Labour government for the aftermath of the financial crisis.

scholarly journals A Note on Technology Shocks and the Great Depression

2016 ◽  
Vol 76 (3) ◽  
pp. 934-936 ◽  
Author(s):  
Robert Inklaar ◽  
Herman de Jong ◽  
Reitze Gouma
Keyword(s):  
Great Depression ◽  
Driving Force ◽  
Technology Shocks ◽  
The Great Depression

The role of technology shocks as a driver of the Great Depression is the topic of our own earlier work and the paper by Watanabe in this issue. While the two studies differ in their data and assumptions, they complement each other and strengthen the conclusion of both papers: technology shocks were not the driving force of the Great Depression.

scholarly journals Financial Distress in the Great Depression

2011 ◽  
Author(s):  
John Graham ◽  
Sonali Hazarika ◽  
Krishnamoorthy Narasimhan
Keyword(s):  
Great Depression ◽  
Financial Distress ◽  
The Great Depression

Columbia Pictures and the Great Depression: A Case Study of Political Writers in Hollywood

2016 ◽  
Author(s):  
Ian Scott
Keyword(s):  
Great Depression ◽  
Political Comedy ◽  
The Great Depression ◽  
Art Form

This analyses the largely neglected and underestimated role of screen writers in 1930s Hollywood, an era when the art of movie writing actually made great strides as an art form. It considers the significance of three Columbia writers – Sidney Buchman, Robert Riskin, and Jo Swerling, why they were able to flourish at this small studio with the support of mogul Harry Cohn, and their role in the making of Frank Capra’s populist classics – notably Mr Deeds Goes to Town (1936) and Mr Smith Goes to Washington (1939). It examines how these scribes responded to the Great Depression not only by becoming active in the newly-formed Screen Writers Guild but also in writing scripts that injected populist values into the Capra movies as well as seemingly non-political comedy films like Platinum Blonde (1931) and Theodora Goes Wild (1935).

The Elusive Harmony between Government and Market Roles

2020 ◽  
pp. 179-200
Author(s):  
Vito Tanzi
Keyword(s):  
Great Depression ◽  
The State ◽  
Market Failures ◽  
New Paradigm ◽  
The Great Recession ◽  
The Great Depression ◽  
Role Of The State ◽  
New Harmony ◽  
The 1960S

At any moment in time there ought to be some harmony between the intervention of the state that the market requires (to correct its market failures), and that citizens demand (to promote equity and a desirable income distribution) and the actual government intervention. This chapter argues that such harmony may have existed in the years when laissez faire was in place and was broadly accepted by those who had political power. The harmony became less and less evident in the later decades of the nineteenth century and during the Great Depression. There seemed to have been greater harmony in the 1960s. That harmony went down in the late 1970s and in the 1980s. It might have been partly restored in the 1990s, with a different conception of the role of the state, with less state and more market, at least in some countries. The harmony broke down again with the Great Recession in 2008–10, There is now, once again, a search for a new paradigm that would indicate the existence of a new harmony.

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