Search Results
Working Paper
Underlying determinants of closed-bank resolution costs
An analysis of the issues surrounding bank resolution costs, looking at failures from 1986 to 1992 and including proxies for fraud, off-balance-sheet risk, brokered deposits, and both regional and size effects. Evidence suggests there was a significant lag between the realization and recognition of losses on bank assets, and that regulators may have practiced forbearance.
Conference Paper
Depositor preference legislation and failed banks' resolution costs
Journal Article
Disinflation, equity valuation, and investor rationality
An examination of the relationship between inflation and equity prices, concluding that equity prices respond rationally to such factors as real interest rates and risk.
Working Paper
Tobin's Q, investment, and endogenous adjustment of financial structure
An analysis of a q model of investment in which financial structure affects firm value, using a perfect foresight model of general equilibrium that includes a debt-related agency cost; uses the comparative statics and dynamics of changing the corporate tax rate as an illustration.
Journal Article
New results on the rationality of survey measures of exchange-rate expectations
In light of research questioning the usefulness of economists' models of exchange-rate determination, this paper investigates the rationality of survey measures of expectations for Deutschmark/dollar exchange rates for 1989-97. Using Liu and Maddala's (1992) "restricted cointegration" test, the author cannot reject the assumption that survey measures are unbiased exchange-rate forecasts. This finding is related to market participants' anticipation of the impact of economic policies.
Journal Article
Why intervention rarely works
Foreign-exchange-market intervention is generally ineffective when undertaken independent of monetary policy. But when undertaken as a goal of monetary policy, exchange-rate management can compromise price stability. This Economic Commentary explains the difficulties of implementing an intervention policy.
Working Paper
Depositor preference and the cost of capital for insured depository institutions
An analysis of the impact of depositor preference laws on the cost of debt capital for banks and on the value of FDIC deposit guarantees. The authors find that depositor preference laws increase the value of uninsured deposit claims and reduce the size of the FDIC subsidy, but will not affect the total value of banks and thrifts unless deposit insurance is mispriced.
Journal Article
SAIF policy options
An outline of three possible options for capitalizing the Savings Association Insurance Fund, which is in danger of suffering a huge premium disadvantage compared to banks insured by the Bank Insurance Fund, and a recommendation that any solution should first consider the policy objectives for maintaining separately chartered housing finance lenders.
Journal Article
Forbearance, subordinated debt, and the cost of capital for insured depository institutions
Using an explicit model for subordinated debt that considers the possibility of FDIC forbearances, the authors show that forbearance 1) alters the required rate of return on subordinated debt while increasing its market value and 2) weakens the effectiveness of such debt as a source of market discipline.
Journal Article
The inaccuracy of newspaper reports of U.S. foreign exchange intervention
A comparison of official data on U.S. foreign exchange intervention with newspaper reports, finding that the series are systematically different and implying either that intervention may not be able to signal monetary policy accurately or that not all market participants have equally accurate information about exchange market intervention.