Bodenhorn, Howard. <br/><br/>
Double Liability at Early American Banks / 
Howard Bodenhorn. 
 - Cambridge, Mass.  National Bureau of Economic Research  2015. 
 - 1 online resource:  illustrations (black and white); 
 - NBER working paper series  no. w21494 .
 - Working Paper Series (National Bureau of Economic Research)  no. w21494. .
<br/><br/> August 2015. 
<br/><br/> Limited liability is a defining feature of the modern corporation, but it was not always so. By the early 1850s about one-half of all states imposed double liability on bank shareholders. This paper shows that double liability was adopted as deposits increased relative to banknotes and in conjunction with free banking; that double liability was associated with more concentrated bank shareholdings, but had little effect on share liquidity; that it increased the price of bank debt; and, that a regulatory change toward greater shareholder liability increased bank leverage ratios. In forcing bank shareholders to have more "skin in the game," double liability changed bank investor, creditor and managerial behaviors. 
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