The Value of Bank Relationships: Evidence from Belgium at the Start of the Great Depression

35 Pages Posted: 7 Sep 2010

See all articles by Marc Deloof

Marc Deloof

University of Antwerp; University of Antwerp - Antwerp Management School

Veronique Vermoesen

University of Antwerp

Date Written: September 6, 2010

Abstract

We analyze the impact of bank relationships on the performance of Belgian firms listed on the Brussels stock exchange at the start of the Great Depression, in 1929–1931. Most of these firms were affiliated with one or more banks via interlocking directorships. Taking into account the number of affiliated banks and their size, the proportion of bank directors on the board, and the number of board seats held by bank directors, we find that bank affiliations did not affect stock returns in 1929. On the other hand, firm value was positively related to the number of board seats held by the firm directors before 1929, but not after 1929. This result holds for both bank directors and other directors. Combined, our results suggest that firms did not derive any benefits from bank affiliations at the start of the Great Depression.

Keywords: Bank relationships, Interlocking directorships, Busy directors, Firm value, Great Depression, Belgium

JEL Classification: G21, G30, G24

Suggested Citation

Deloof, Marc and Vermoesen, Veronique, The Value of Bank Relationships: Evidence from Belgium at the Start of the Great Depression (September 6, 2010). Available at SSRN: https://ssrn.com/abstract=1672664 or http://dx.doi.org/10.2139/ssrn.1672664

Marc Deloof (Contact Author)

University of Antwerp ( email )

Prinsstraat 13
Faculteit TEW
Antwerpen, 2000
Belgium
+32 3 265 41 69 (Phone)
+32 3 265 47 99 (Fax)

HOME PAGE: http://https://www.uantwerpen.be/en/staff/marc-deloof/

University of Antwerp - Antwerp Management School ( email )

Boogkeers 5
Antwerp, 2000
Belgium

Veronique Vermoesen

University of Antwerp ( email )

Prinsstraat 13
Antwerp, Antwerp 2000
Belgium

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