Working Paper
Did FDICIA enhance market discipline on community banks? a look at evidence from the jumbo-CD market
King, Thomas B.; Vaughan, Mark D.; Meyer, Andrew P.; Hall, John R. (2002)
The Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA) directed the FDIC to resolve bank failures in the least costly manner, shifting more of the failure-resolution burden to jumbo-CD holders. We examine the sensitivity of jumbo-CD yields and runoffs to failure risk before and after FDICIA. We also examine the economic significance of estimated risk sensitivities before and after the Act, looking at the implied impact of risk on bank funding costs and profits. The evidence indicates that yields and runoff were sensitive to risk before and after FDICIA, but that this ...
Supervisory Policy Analysis Working Papers , Paper 2002-04

Working Paper
Can feedback from the jumbo-CD market improve bank surveillance?
Meyer, Andrew P.; Vaughan, Mark D.; Gilbert, R. Alton (2003)
We examine the value of jumbo certificate-of-deposit (CD) signals in bank surveillance. To do so, we first construct proxies for default premiums and deposit runoffs and then rank banks based on these risk proxies. Next, we rank banks based on the output of a logit model typical of the econometric models used in off-site surveillance. Finally, we compare jumbo-CD rankings and surveillance-model rankings as tools for predicting financial distress. Our comparisons include eight out-of-sample test windows during the 1990s. We find that rankings obtained from jumbo-CD data would not have improved ...
Working Papers , Paper 2003-041

Working Paper
Do jumbo-CD holders care about anything?
King, Thomas B.; Vaughan, Mark D.; Meyer, Andrew P.; Hall, John R. (2002)
Uninsured deposits represent a theoretically appealing but relatively untested alternative to subordinated debt for incorporating market discipline into banking supervision. To make the deposit market a useful supervisory tool, it is necessary to know what types of risk are priced by depositors and in what proportions. Using a clustering technique to select from among a large set of potential regressors, as well as a carefully chosen set of control variables, we attempt to determine the types of risk that cause uninsured depositors to react in both the price and quantity dimensions. As a ...
Supervisory Policy Analysis Working Papers , Paper 2002-05

Working Paper
Is the Federal Home Loan Bank system good for banks? a look at evidence on membership, advances and risk
Stojanovic, Dusan; Yeager, Timothy J.; Vaughan, Mark D. (2005)
Since the early 1990s, commercial banks have turned to Federal Home Loan Bank (FHLBank) advances to plug the gap between loan and deposit growth. Is this trend worrisome? On the one hand, advances implicitly encourage risk by insulating borrowers from market discipline. On the other, advances give borrowers greater flexibility to managing interest rate and liquidity risk. And access to FHLBank funding encourages members to reshape their balance sheets in ways that could lower credit risk. Using quarterly financial and supervisory data for banks from 1992 to 2000, we assess the effect of ...
Supervisory Policy Analysis Working Papers , Paper 2005-02

Working Paper
Do depositors care about enforcement actions?
Vaughan, Mark D.; Gilbert, R. Alton (2000)
Since 1990, federal bank supervisors have publicly announced formal enforcement actions. This change in regime provides a natural laboratory to test two propositions: (1) claims by economists that putting confidential supervisory information in the public domain will enhance market discipline and (2) claims by bank supervisors that releasing such data will spark runs. To evaluate these propositions, we measure depositor reaction to 87 Federal Reserve announcements of enforcement actions. We compare deposit growth rates and yield spreads before and after the announcements at the sample banks ...
Working Papers , Paper 2000-020

Journal Article
Bullish on banking: thriving in the information age
Vaughan, Mark D. (1996-01)
The Regional Economist , Issue Jan , Pages 4-9

Journal Article
How healthy is the U.S. banking system? funneling financial data into failure probabilities
Meyer, Andrew P.; Vaughan, Mark D.; Gilbert, R. Alton (2001-04)
The diagnosis on banks is comforting, despite a few weak spots here and there and an economy that's slowing down.
The Regional Economist , Issue Apr , Pages 12-13

Journal Article
Is federal home loan bank funding a risky business for the FDIC?
Stojanovic, Dusan; Yeager, Timothy J.; Vaughan, Mark D. (2000-10)
Easy access to FHLB funds has helped community banks stay afloat in today's competitive markets, but could pose a risk to the FDIC's insurance fund.
The Regional Economist , Issue Oct , Pages 4-9

Journal Article
The commercial paper market: who's minding the shop?
Stojanovic, Dusan; Vaughan, Mark D. (1998-04)
Commercial paper has become a force to be reckoned with in the U.S. money market. It comes with risks, though, that shouldn't be papered over.
The Regional Economist , Issue Apr , Pages 5-9

Journal Article
Jumbo CDs play tiny role in policing risky banks ... so far
Vaughan, Mark D.; Meyer, Andrew P.; King, Thomas B.; Hall, John R. (2002-07)
Reforms enacted after the S&L crisis have yet to persuade holders of jumbo CDs to monitor their banks' risky practices.
The Regional Economist , Issue Jul. , Pages 12-13