Jump to ContentJump to Main Navigation
British Financial Crises since 1825$
Users without a subscription are not able to see the full content.

Nicholas Dimsdale and Anthony Hotson

Print publication date: 2014

Print ISBN-13: 9780199688661

Published to Oxford Scholarship Online: November 2014

DOI: 10.1093/acprof:oso/9780199688661.001.0001

Show Summary Details
Page of

PRINTED FROM OXFORD SCHOLARSHIP ONLINE (oxford.universitypressscholarship.com). (c) Copyright Oxford University Press, 2021. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in OSO for personal use. date: 01 August 2021

Holding Shareholders to Account

Holding Shareholders to Account

British Banking Stability and Contingent Capital

Chapter:
(p.139) 8 Holding Shareholders to Account
Source:
British Financial Crises since 1825
Author(s):

John Turner

Publisher:
Oxford University Press
DOI:10.1093/acprof:oso/9780199688661.003.0008

This chapter seeks to explain the relative stability of the British banking system in terms of its capital structure. From 1826 joint-stock banking was allowed, but shareholder liability was jointly and severally unlimited. Limited liability banks were allowed from 1857–8, but these banks issued partly paid shares with an obligation on shareholders to subscribe for uncalled capital. Contingent capital meant that shareholders and managers would suffer losses in the event of failure and this discouraged risk shifting at the expense of note-holders and depositors. Although individual banks collapsed, the failure rate of banks (in terms of number or capital) did not reach a critical level—10 per cent—beyond which the payments system might have been threatened. This chapter argues that agency problems and systemic risk rose after the abolition of contingent share capital in 1958 and the deregulation of the banking sector in the 1970s.

Keywords:   contingent capital, risk, payment, systemic, stability

Oxford Scholarship Online requires a subscription or purchase to access the full text of books within the service. Public users can however freely search the site and view the abstracts and keywords for each book and chapter.

Please, subscribe or login to access full text content.

If you think you should have access to this title, please contact your librarian.

To troubleshoot, please check our FAQs , and if you can't find the answer there, please contact us .