New paper on "Old Bonds"

Conflicts of Interest, Reputation, and the Interwar Debt Crisis: Banksters or Bad Luck?
(with Marc Flandreau and Norbert Galliard)

This paper builds a new dataset with detailed information on the universe of
foreign government bonds issued in New York in the 1920s and uses these data to
describe the behavior of the financial intermediaries which operated in the New
York market during the period leading to the interwar debt crisis. The paper
starts by showing that concerns over reputation played an important role in
intermediaries‘ underwriting choices. Next, the paper checks whether banks
managed to charge abnormal underwriting fees on bonds that would eventually
default and finds no evidence of such practice (―banksterism‖). The paper
concludes by discussing some parallels between the experience of the 1920s and
the current debate on the "originate and distribute" model.

The paper is here
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