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Empirical Analysis of Determinants of Geographic Differentials in the Bank Failure Rate in the U.S.: A Heteroskedastic-Tobit Estimation

Author

Listed:
  • Cebula, Richard
  • McGrath, Richard
  • Perry, William

Abstract

Using the heteroskedastic-TOBIT model to deal with both censored data and a heteroskedasticity problem, this study address determinants of interstate differentials in bank closing rates over the 1982-91 period. It is found that the bank closing rate in a state is an increasing function of the cost of deposits, the percentage of state employment derived from oil and natural gas extraction, and the existence of unit banking regulations, while being a decreasing function of housing price inflation in the state, the average percentage growth rate of the GSP in the state, and the percentage of banks in the state having federal charters. (JEL codes: G2, G20, G21)

Suggested Citation

  • Cebula, Richard & McGrath, Richard & Perry, William, 2002. "Empirical Analysis of Determinants of Geographic Differentials in the Bank Failure Rate in the U.S.: A Heteroskedastic-Tobit Estimation," MPRA Paper 60169, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:60169
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    File URL: https://mpra.ub.uni-muenchen.de/60169/1/MPRA_paper_60169.pdf
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    References listed on IDEAS

    as
    1. Richard J. Cebula, 1999. "A Current Evaluation of U.S. Banking Legislation: The Federal Deposit Insurance Corporation Improvement Act and Its Performance in Terms of Financial Services Industry Impacts," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 135(II), pages 145-164, June.
    2. Edward J. Kane, 1985. "The Gathering Crisis in Federal Deposit Insurance," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262611856, December.
    3. Cebula, Richard, 1992. "The Impact of Federal Deposit Insurance on Savings and Loan Failures," MPRA Paper 51540, University Library of Munich, Germany.
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    More about this item

    Keywords

    bank failures; economic factors; regulatory factors; bank charters;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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