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Are Bank Holding Companies a Source of Strength to Their Banking Subsidiaries?

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Author Info
ADAM B. ASHCRAFT

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Abstract

I document evidence that a bank affiliated with a multi-bank holding company (MBHC) is significantly safer than either a stand-alone bank or a bank affiliated with a one-bank holding company. Not only does MBHC affiliation reduce the probability of future financial distress, but distressed affiliated banks are also more likely to receive capital injections, recover more quickly, and are less likely to fail over the next year. Moreover, the measured benefits of affiliation are much larger than those that existed before recent reforms of bank holding company regulation, suggesting that much of the observed benefit can be attributed to regulation and not the market. Copyright (c)2008 The Ohio State University.

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File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.1538-4616.2008.00113.x
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Publisher Info
Article provided by Blackwell Publishing in its journal Journal of Money, Credit and Banking.

Volume (Year): 40 (2008)
Issue (Month): 2-3 (03)
Pages: 273-294
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Handle: RePEc:mcb:jmoncb:v:40:y:2008:i:2-3:p:273-294

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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0022-2879

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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.:
  1. Adam B. Ashcraft, 2003. "Are banks really special? New evidence from the FDIC-induced failure of healthy banks," Staff Reports 176, Federal Reserve Bank of New York. [Downloadable!]
    Other versions:
  2. Adam B. Ashcraft, 2001. "New evidence on the lending channel," Staff Reports 136, Federal Reserve Bank of New York. [Downloadable!]
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  3. Anthony Cornyn & Gerald Hanweck & Stephen Rhoades & John Rose, 1986. "An analysis of the concept of corporate separateness in BHC regulation from an economic perspective," Proceedings, Federal Reserve Bank of Chicago, pages 174-212.
  4. Mark J. Flannery, 1986. "Contagious bank runs, financial structure and corporate separateness within a bank holding company," Proceedings, Federal Reserve Bank of Chicago, pages 213-230.
  5. John R. Walter, 1996. "Firewalls," Economic Quarterly, Federal Reserve Bank of Richmond, issue Fall, pages 15-39. [Downloadable!]
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Cited by:
(explanations, 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.)

  1. Xavier Freixas & Gyöngyi Lóránth & Alan D. Morrison, 2005. "Regulating Financial Conglomerates," OFRC Working Papers Series 2005fe03, Oxford Financial Research Centre. [Downloadable!]
    Other versions:
  2. Adam B. Ashcraft, 2006. "Does the market discipline banks? New evidence from the regulatory capital mix," Staff Reports 244, Federal Reserve Bank of New York. [Downloadable!]
  3. Allen N. Berger & Christa H.S. Bouwman, 2005. "Bank liquidity creation and bank capital," Proceedings, Federal Reserve Bank of Chicago, issue May, pages 223-228. [Downloadable!]
  4. Xavier Freixas & Gyöngyi Lóránth & Alan D. Morrison, 2005. "Regulating Financial Conglomerates," Economics Working Papers 820, Department of Economics and Business, Universitat Pompeu Fabra. [Downloadable!]
  5. De Haas, Ralph & van Lelyveld, Iman, 2009. "Internal Capital Markets and Lending by Multinational Bank Subsidiaries," MPRA Paper 13164, University Library of Munich, Germany. [Downloadable!]
    Other versions:
  6. Bradley, Christine & Jones, Kenneth D., 2007. "Loss Sharing Rules for Bank Holding Companies: An Assessment of the Federal Reserve's Source-of-Strength Policy and the FDIC's Cross Guarantee Authority," MPRA Paper 14116, University Library of Munich, Germany. [Downloadable!]
  7. Freixas, Xavier & Lóránth, Gyöngyi & Morrison, Alan, 2005. "Regulating Financial Conglomerates," CEPR Discussion Papers 5036, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  8. Nicola Cetorelli & Linda S. Goldberg, 2009. "Globalized banks: lending to emerging markets in the crisis," Staff Reports 377, Federal Reserve Bank of New York. [Downloadable!]
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