Forbearance by Contract: How Building and Loans Mitigated the Mortgage Crisis of the 1930s
Sebastian Fleitas,
Price Fishback and
Kenneth Snowden ()
No 21786, NBER Working Papers from National Bureau of Economic Research, Inc
Abstract:
During the Great Depression, Building and Loans (B&Ls), the leading home lenders, had a structure that mitigated the crisis. Borrowers were owners of the B&L and dissolution of the institution required a two-thirds majority vote. Using panel data from New Jersey in the 1930s, we find that this voting rule delayed dissolution by about one year. The year delay allowed one-fourth of the borrowers in the at-risk B&L to pay off their loans, but nonborrowers lost share value. The net loss was roughly -0.67 percent of the value of all New Jersey B&L assets in the mid-1930s.
JEL-codes: G23 N22 R31 (search for similar items in EconPapers)
Date: 2015-12
New Economics Papers: this item is included in nep-his and nep-ure
Note: DAE
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