Advanced Search
MyIDEAS: Login

Determinants of off-balance sheet usage in private banks

Contents:

Author Info

  • Elizabeth W. Cooper
Registered author(s):

    Abstract

    Purpose – The purpose of this paper is to analyze the off-balance sheet (OBS) behavior of a sample of small commercial banks in the USA in 2006. In particular, it aims to study the impact that monitoring intensity has on bank OBS usage. Design/methodology/approach – The paper uses a two-stage least squares regression methodology and splits the sample by supervisory bank ratings to ascertain the impact that monitoring intensity has on OBS activity. Findings – Certain board characteristics and executive compensation schemes do influence the extent of OBS usage in banks only when the bank is poorly rated. When the bank is strong and monitoring is less extreme, these variables have limited relationship with OBS usage. Research limitations/implications – Findings are consistent with the idea that monitoring intensity increases when ratings decline and this leads to more risk-averse behavior on the part of bank managers. Practical implications – These results lend support to the argument of stronger regulation in the banking industry since monitoring does impact on bank management behavior and decision making. Originality/value – Because of the current financial crisis, research on OBS usage is extremely relevant and important. Here, the paper looks at small private commercial banks that engage in OBS activity. This phenomenon is not as well studied or understood.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://www.emeraldinsight.com/journals.htm?issn=1086-7376&volume=28&issue=4&articleid=1954323&show=abstract
    Download Restriction: Cannot be freely downloaded

    As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

    Bibliographic Info

    Article provided by Emerald Group Publishing in its journal Studies in Economics and Finance.

    Volume (Year): 28 (2011)
    Issue (Month): 4 (October)
    Pages: 248-259

    as in new window
    Handle: RePEc:eme:sefpps:v:28:y:2011:i:4:p:248-259

    Contact details of provider:
    Web page: http://www.emeraldinsight.com

    Order Information:
    Postal: Emerald Group Publishing, Howard House, Wagon Lane, Bingley, BD16 1WA, UK
    Email:
    Web: http://www.emeraldinsight.com/sef.htm

    Related research

    Keywords: Commercial banks; Financial crisis; Monitoring; Off-balance sheet; Private banks; Risk-averse behaviour; United States of America;

    References

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
    as in new window
    1. Jensen, Michael C, 1993. " The Modern Industrial Revolution, Exit, and the Failure of Internal Control Systems," Journal of Finance, American Finance Association, vol. 48(3), pages 831-80, July.
    2. Simon H. Kwan, 2004. "Risk and return of publicly held versus privately owned banks," Economic Policy Review, Federal Reserve Bank of New York, issue Sep, pages 97-107.
    3. Kose John & Hamid Mehran & Yiming Qian, 2007. "Regulation, subordinated debt, and incentive features of CEO compensation in the banking industry," Staff Reports 308, Federal Reserve Bank of New York.
    4. John Byrd & Elizabeth S. Cooperman & Glenn A. Wolfe, 2010. "Director tenure and the compensation of bank CEOs," Managerial Finance, Emerald Group Publishing, vol. 36(2), pages 86-102, February.
    5. Gregory Sierra & Eli Talmor & James Wallace, 2006. "An Examination of Multiple Governance Forces within Bank Holding Companies," Journal of Financial Services Research, Springer, vol. 29(2), pages 105-123, April.
    6. Chandra S. Mishra & James F. Nielsen, 2000. "Board Independence and Compensation Policies in Large Bank Holding Companies," Financial Management, Financial Management Association, vol. 29(3), Fall.
    7. G. Dionne & T. M. Harchaoui, 2002. "Banks’ Capital, Securitization and Credit Risk : An Empirical Evidence for Canada," THEMA Working Papers 2002-33, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
    8. Brent Ambrose & Michael LaCour-Little & Anthony Sanders, 2005. "Does Regulatory Capital Arbitrage, Reputation, or Asymmetric Information Drive Securitization?," Journal of Financial Services Research, Springer, vol. 28(1), pages 113-133, October.
    9. Baker, Malcolm & Gompers, Paul A, 2003. "The Determinants of Board Structure at the Initial Public Offering," Journal of Law and Economics, University of Chicago Press, vol. 46(2), pages 569-98, October.
    10. Hatice Uzun & Elizabeth Webb, 2007. "Securitization and risk: empirical evidence on US banks," Journal of Risk Finance, Emerald Group Publishing, vol. 8(1), pages 11-23, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:eme:sefpps:v:28:y:2011:i:4:p:248-259. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Louise Lister).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.