'Trust is good, control is better': the 1974 Herstatt-Bank crisis and its implications for international regulatory reform

Mourlon-Druol, E. (2015) 'Trust is good, control is better': the 1974 Herstatt-Bank crisis and its implications for international regulatory reform. Business History, 57(2), pp. 311-334. (doi:10.1080/00076791.2014.950956)

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Abstract

With its international supervisory and regulatory implications, the failure of Bankhaus Herstatt is one of the landmarks of post-war financial history. This article offers the first comprehensive historical account of the Herstatt crisis, and contributes to the wider discussions on international supervisory and regulatory reform since the mid-1970s, including regulatory capture, markets' self-regulation and resolution of failed banks. In doing so, it first argues that contrary to a widely held view, the German authorities received early and repeated warnings about Herstatt's dealings but this involved only limited and ineffective regulatory/supervisory responses, then it turns to the actual collapse of the bank in June 1974, and finally explores the wider regulatory issues raised by the Herstatt case.

Item Type:Articles
Status:Published
Refereed:Yes
Glasgow Author(s) Enlighten ID:Mourlon-Druol, Professor Emmanuel
Authors: Mourlon-Druol, E.
College/School:College of Social Sciences > Adam Smith Business School > Management
Journal Name:Business History
Publisher:Taylor and Francis
ISSN:0007-6791
ISSN (Online):1743-7938
Copyright Holders:Copyright © 2015 The Authors
First Published:First published in Business History 57(2):311-334
Publisher Policy:Reproduced under a Creative Commons License

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Project CodeAward NoProject NamePrincipal InvestigatorFunder's NameFunder RefLead Dept
524121The development of international financial regulation and supervision 1961-1982Catherine SchenkEconomic & Social Research Council (ESRC)ES/H026029/1SPS - ECONOMIC & SOCIAL HISTORY