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Explaining Recent Connecticut Bank Failures

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  • Stephen M. Miller

    (University of Connecticut)

  • Athanasios Noulas

    (University of Macedonia)

Abstract

Significant numbers of U.S. commercial bank failures in the late 1980s and early 1990s raise important questions about bank performance. We develop a failure-prediction model for Connecticut banks to examine events in 1991 and 1992. We adopt data envelopment analysis to derive measures of managerial efficiency. Our findings can be briefly stated. Managerial inefficiency does not provide significant information to explain Connecticut bank failures. Portfolio variables do generally contain significant information.

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File URL: http://web2.uconn.edu/economics/working/1995-01.pdf
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Bibliographic Info

Paper provided by University of Connecticut, Department of Economics in its series Working papers with number 1995-01.

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Length: 19 pages
Date of creation: Oct 1995
Date of revision:
Handle: RePEc:uct:uconnp:1995-01

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Postal: University of Connecticut 341 Mansfield Road, Unit 1063 Storrs, CT 06269-1063
Phone: (860) 486-4889
Fax: (860) 486-4463
Web page: http://www.econ.uconn.edu/
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  1. Richard Duwe & James Harvey, 1988. "Problem banks: their characteristics and possible causes of deterioration," Financial Industry Perspectives, Federal Reserve Bank of Kansas City, pages 3-11.
  2. Aly, Hassan Y, et al, 1990. "Technical, Scale, and Allocative Efficiencies in U.S. Banking: An Empirical Investigation," The Review of Economics and Statistics, MIT Press, vol. 72(2), pages 211-18, May.
  3. Rangan, Nanda & Grabowski, Richard & Aly, Hassan Y. & Pasurka, Carl, 1988. "The technical efficiency of US banks," Economics Letters, Elsevier, vol. 28(2), pages 169-175.
  4. Thomas F. Siems, 1992. "Quantifying management's role in bank survival," Economic and Financial Policy Review, Federal Reserve Bank of Dallas, issue Q I, pages 29-41.
  5. Meyer, Paul A & Pifer, Howard W, 1970. "Prediction of Bank Failures," Journal of Finance, American Finance Association, vol. 25(4), pages 853-68, September.
  6. Sinkey, Joseph F, Jr, 1975. "A Multivariate Statistical Analysis of the Characteristics of Problem Banks," Journal of Finance, American Finance Association, vol. 30(1), pages 21-36, March.
  7. Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November.
  8. Ferrier, Gary D. & Lovell, C. A. Knox, 1990. "Measuring cost efficiency in banking : Econometric and linear programming evidence," Journal of Econometrics, Elsevier, vol. 46(1-2), pages 229-245.
  9. Richard S. Barr & Thomas F. Siems, 1994. "Predicting bank failure using DEA to quantify management quality," Financial Industry Studies Working Paper 94-1, Federal Reserve Bank of Dallas.
  10. Miller, Stephen M. & Noulas, Athanasios G., 1996. "The technical efficiency of large bank production," Journal of Banking & Finance, Elsevier, vol. 20(3), pages 495-509, April.
  11. Seiford, Lawrence M. & Thrall, Robert M., 1990. "Recent developments in DEA : The mathematical programming approach to frontier analysis," Journal of Econometrics, Elsevier, vol. 46(1-2), pages 7-38.
  12. Gary Whalen, 1991. "A proportional hazards model of bank failure: an examination of its usefulness as an early warning tool," Economic Review, Federal Reserve Bank of Cleveland, issue Q I, pages 21-31.
  13. Piyu Yue, 1992. "Data envelopment analysis and commercial bank performance: a primer with applications to Missouri banks," Review, Federal Reserve Bank of St. Louis, issue Jan, pages 31-45.
  14. Coleen C. Pantalone & Marjorie B. Platt, 1987. "Predicting commercial bank failure since deregulation," New England Economic Review, Federal Reserve Bank of Boston, issue Jul, pages 37-47.
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Cited by:
  1. Swami, Onkar Shivraj & Vishnu Kumar, N. Arun & Baruah, Palash, 2012. "Determinants of the exit decision of foreign banks in India," MPRA Paper 38722, University Library of Munich, Germany.

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