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Underlying determinants of closed-bank resolution costs

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Listed:
  • William P. Osterberg
  • James B. Thomson

Abstract

An analysis of the issues surrounding bank resolution costs, looking at failures from 1986 to 1992 and including proxies for fraud, off-balance-sheet risk, brokered deposits, and both regional and size effects. Evidence suggests there was a significant lag between the realization and recognition of losses on bank assets, and that regulators may have practiced forbearance.

Suggested Citation

  • William P. Osterberg & James B. Thomson, 1994. "Underlying determinants of closed-bank resolution costs," Working Papers (Old Series) 9403, Federal Reserve Bank of Cleveland.
    • Handle: RePEc:fip:fedcwp:9403
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    References listed on IDEAS

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    1. Asli Demirgüč-Kunt, 1989. "Deposit-institution failures: a review of empirical literature," Economic Review, Federal Reserve Bank of Cleveland, vol. 25(Q IV), pages 2-18.
    2. Keeley, Michael C, 1990. "Deposit Insurance, Risk, and Market Power in Banking," American Economic Review, American Economic Association, vol. 80(5), pages 1183-1200, December.
    3. Barth, James R & Bartholomew, Philip F & Bradley, Michael, 1990. "Determinants of Thrift Institution Resolution Costs," Journal of Finance, American Finance Association, vol. 45(3), pages 731-754, July.
    4. Kane, Edward J, 1990. "Principal-Agent Problems in S&L Salvage," Journal of Finance, American Finance Association, vol. 45(3), pages 755-764, July.
    5. Boot, Arnoud W. A. & Thakor, Anjan V., 1991. "Off-balance sheet liabilities, deposit insurance and capital regulation," Journal of Banking & Finance, Elsevier, vol. 15(4-5), pages 825-846, September.
    6. Avery, Robert B. & Berger, Allen N., 1991. "Loan commitments and bank risk exposure," Journal of Banking & Finance, Elsevier, vol. 15(1), pages 173-192, February.
    7. Daria B. Caliguire & James B. Thomson, 1987. "FDIC policies for dealing with failed and troubled institutions," Economic Commentary, Federal Reserve Bank of Cleveland, issue Oct.
    8. Ramon P. DeGennaro & James B. Thomson, 1992. "Capital forbearance and thrifts: an ex post examination of regulatory gambling," Working Papers (Old Series) 9209, Federal Reserve Bank of Cleveland.
    9. Allen, Linda & Saunders, Anthony, 1993. "Forbearance and valuation of deposit insurance as a callable put," Journal of Banking & Finance, Elsevier, vol. 17(4), pages 629-643, June.
    10. Richard E. Randall, 1993. "Lessons from New England bank failures," New England Economic Review, Federal Reserve Bank of Boston, issue May, pages 13-35.
    11. Buser, Stephen A & Chen, Andrew H & Kane, Edward J, 1981. "Federal Deposit Insurance, Regulatory Policy, and Optimal Bank Capital," Journal of Finance, American Finance Association, vol. 36(1), pages 51-60, March.
    12. Gary D. Koppenhaver & Roger D. Stover, 1991. "Standby letters of credit and bank capital: evidence of market disciplines," Proceedings 326, Federal Reserve Bank of Chicago.
    13. Fred C. Graham & James E. Horner, 1988. "Bank failure: an evaluation of the factors contributing to the failure of national banks," Proceedings 210, Federal Reserve Bank of Chicago.
    14. James, Christopher, 1991. "The Losses Realized in Bank Failures," Journal of Finance, American Finance Association, vol. 46(4), pages 1223-1242, September.
    15. Christopher J. Pike & James B. Thomson, 1992. "FDICIA's prompt corrective action provisions," Economic Commentary, Federal Reserve Bank of Cleveland, issue Sep.
    16. Kane, Edward J., 1986. "Appearance and reality in deposit insurance: The case for reform," Journal of Banking & Finance, Elsevier, vol. 10(2), pages 175-188, June.
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    Cited by:

    1. Klaus Schaeck, 2008. "Bank Liability Structure, FDIC Loss, and Time to Failure: A Quantile Regression Approach," Journal of Financial Services Research, Springer;Western Finance Association, vol. 33(3), pages 163-179, June.
    2. William P. Osterberg & James B. Thomson, 1997. "Depositor preference legislation and failed banks' resolution costs," Working Papers (Old Series) 9715, Federal Reserve Bank of Cleveland.

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