​In a recent verdict (subsequently overturned in part by the Israel Supreme Court), an Israeli Court found that in the early 1980's Israeli banks, representing 95 percent of commercial banking, were guilty of providing shareholders with fraudulent guarantees that share prices would rise indefinitely, that they harmed banking stability and caused the government to take-over the banks. We use high frequency price data to identify whether a guarantee was, indeed, provided.

We also compare 1993 bank share prices after the banks were partially re-listed with 1983 pre-crisis prices. The figures indicate that 1993 time-adjusted market values were $10 billion lower than in 1983, a decline borne by two groups of shareholders: pre-crisis shareholders ($4 billion) and the government which became the sole shareholder in 1983 ($6 billion).

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