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Conference Paper
Pricing bank default risk in subordinated debenture yields.
Working Paper
The informational advantage of specialized monitors: the case of bank examiners
Large commercial banking firms are monitored by specialized private sector monitors and by specialized government examiners. Previous research suggests that bank exams produce little useful information that is not already reflected in market prices. In this article, we apply a new research methodology to a unique data set, and find that government exams of large national banks produce significant new information which financial markets do not fully internalize for several additional months. Our results indicate that specialized government monitors can identify value-relevant information about ...
Conference Paper
Payday lending: do the costs justify the price?
Conference Paper
Pricing deposit insurance when the insurer measures risk with error
Conference Paper
Market forces at work in the banking industry: evidence from the capital buildup of the 1990s
We document the build-up of regulatory and market equity capital in large U.S. bank holding companies between 1986 and 2000. During this time, large banking firms raised their capital ratios to the highest levels in more than 50 years. Since 1995, essentially none of the 100 largest U.S. banking firms have been constrained by regulatory capital standards. Nor do these firms appear to be protecting themselves explicitly against falling below supervisory minimum capital standards. Variation in bank equity ratios reliably reflects portfolio risk, and we attribute the capital increase to enhanced ...
Journal Article
Deposit insurance creates a need for bank regulation
Conference Paper
Supervising bank safety and soundness: some open issues
Conference Paper
Corporate finances, market discipline, and bank supervision
Working Paper
Comparing market and supervisory assessments of bank performance: who knows what when?
We compare the timeliness and accuracy of government supervisors versus market participants in assessing the condition of large U.S. bank holding companies. We find that supervisors and bond rating agencies both have some prior information that is useful to the other. In contrast, supervisory assessments and equity market indicators are not strongly interrelated. We also find that supervisory assessments are much less accurate overall than both bond and equity market assessments in predicting future changes in performance, but supervisors may be more accurate when inspections are recent. To ...