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Conference Paper
An analysis of risk-based deposit insurance for commercial banks
Conference Paper
Bank securities powers: are there diversification gains?
Discussion Paper
Bank regulation and the efficiency of financial intermediation
Journal Article
A reconsideration of the risk sensitivity of U.S. banking organization subordinated debt spreads: a sample selection approach
The authors estimate a sample selection model over three distinct regulatory "regimes" when the treatment of bank bondholders (in the event of bank failures) differed substantially. They then estimate their selection model to test the strength of bond market discipline over these three regulatory regimes, finding that bank bond spreads are positively associated with bank risk measures during all three regimes, even during the too-big-to-fail period.
Conference Paper
The subsidy provided by the federal safety net: theory and measurement
Views about the value to depository institutions of the federal safety net differ widely. Resolution of the issue is important because defining the appropriate relationship between the federal safety net and financial institutions is central to the design of efficient financial modernization strategies. A model is presented of how the safety net subsidy affects the size of the banking system and the behavior of banks. The model suggests that banks should have lower capital ratios than similar nonbank financial firms. Evidence is presented that supports this prediction, and that banks have ...
Working Paper
Market discipline in banking reconsidered: the roles of deposit insurance reform, funding manager decisions and bond market liquidity
This paper demonstrates that the risk sensitivity of a banking organization's subordinated debt yield spreads may understate the potential for market discipline in some periods and overstate in others because such spreads contain liquidity premiums that are driven, in part, by the risk-sensitivity of funding manager decisions. Once such decisions are accounted for, new evidence is provided that indicates that subordinated debt spreads were sensitive to organization-specific risks in the mid-1980s, and that the risk- sensitivity of such spreads was about the same in the pre- and post-FDICIA ...
Discussion Paper
An analysis of the short-run money supply mechanism
Later edition, No. 89