Data and Code for: The Carrot and the Stick: Bank Bailouts and the Disciplining Role of Board Appointments
Principal Investigator(s): View help for Principal Investigator(s) Christian Mücke, Goethe University; Loriana Pelizzon, Goethe University; Vincenzo Pezone, Tilburg University; Anjan Thakor, Washington University in St Louis
Version: View help for Version V1
| Name | File Type | Size | Last Modified |
|---|---|---|---|
| replication_carrot_stick | 01/23/2024 05:15:PM |
Project Citation:
Project Description
We empirically examine the Capital Purchase Program (CPP) used by the US government to bail out distressed banks and its implications for regulatory policy. We find strong evidence that a feature of the CPP -- the government's ability to appoint independent directors on the board of an assisted bank that missed six dividend payments to Treasury -- had a significant effect on bank behavior. Banks were averse to these appointments – the empirical distribution of missed payments exhibits a sharp discontinuity at five. Director appointments by Treasury were associated with improved bank performance and lower CEO pay.
Scope of Project
G01 Financial Crises
G21 Banks; Depository Institutions; Micro Finance Institutions; Mortgages
G28 Financial Institutions and Services: Government Policy and Regulation
G38 Corporate Finance and Governance: Government Policy and Regulation
H81 Governmental Loans; Loan Guarantees; Credits; Grants; Bailouts
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