Interlocking directorates and conflicts of interest: The Rotterdamsche Bankvereeniging, Müller & Co. and the Dutch financial crisis of the 1920s

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Abstract

How can interlocking directorates cause financial instability for universal banks? A detailed history of the Rotterdamsche Bankvereeninging in the 1920s answers this question in a case study. This large commercial bank adopted a new German-style universal banking business model from the early 1910s, sharing directors with the firms it financed as a means of controlling its interests. Then, in 1924, it required assistance from the Dutch state in order to survive a bank run brought on by public concerns over its close ties with Müller & Co., a trading conglomerate that suffered badly in the economic downturn of the early 1920s. Using a new narrative history combined with an interpretive model, this article shows how the interlocking directorates between the bank and this major client, and in particular the direction of influence of these interlocks, resulted in a conflict of interest that could not be easily overcome.
Original languageEnglish
Pages (from-to)314-334
Number of pages21
JournalBusiness History
Volume56
Issue number2
Early online date10 Jun 2013
DOIs
Publication statusPublished - 2014

Keywords

  • interlocking directorates
  • conflicts of interest
  • financial crises
  • universal banking
  • the Netherlands

ASJC Scopus subject areas

  • Business, Management and Accounting (miscellaneous)
  • Business and International Management
  • History

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