The performance of banks around the receipt and repayment of TARP funds: Over-achievers versus under-achievers
In this paper, we look at how the pre-crisis health of banks is related to the probability of receiving and repaying TARP capital. We find that financial performance characteristics that are related to the probability of receiving TARP funds differ for the healthiest (“over-achiever”) versus the least healthy (“under-achiever”) banks. We find that TARP under-achievers have some, but not consistent, weaknesses in income production. These banks also are experiencing liquidity issues as customers, shut out of public debt markets, get bank loans through drawdowns of loan commitments. Unlike TARP under-achievers, TARP over-achievers’ loans are performing well. Yet, liquidity issues (from low levels of liquid assets and core deposits and drawdowns of loan commitments) hurt the abilities of these banks to continue their lending. Differences between under-achiever and over-achiever banks are also found for repayment and deadbeat TARP banks.
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.
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.
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.:
- Ongena, Steven & Popov, Alexander, 2010.
"Interbank market integration, loan rates, and firm leverage,"
Working Paper Series
1252, European Central Bank.
- Popov, Alexander & Ongena, Steven, 2011. "Interbank market integration, loan rates, and firm leverage," Journal of Banking & Finance, Elsevier, vol. 35(3), pages 544-559, March.
- Aebi, Vincent & Sabato, Gabriele & Schmid, Markus, 2012. "Risk management, corporate governance, and bank performance in the financial crisis," Journal of Banking & Finance, Elsevier, vol. 36(12), pages 3213-3226.
- Jin, Justin Yiqiang & Kanagaretnam, Kiridaran & Lobo, Gerald J., 2011. "Ability of accounting and audit quality variables to predict bank failure during the financial crisis," Journal of Banking & Finance, Elsevier, vol. 35(11), pages 2811-2819, November.
- Dinara Bayazitova & Anil Shivdasani, 2012. "Assessing TARP," Review of Financial Studies, Society for Financial Studies, vol. 25(2), pages 377-407.
- Veronesi, Pietro & Zingales, Luigi, 2009.
CEPR Discussion Papers
7528, C.E.P.R. Discussion Papers.
- Lepetit, Laetitia & Nys, Emmanuelle & Rous, Philippe & Tarazi, Amine, 2008.
"Bank income structure and risk: An empirical analysis of European banks,"
Journal of Banking & Finance,
Elsevier, vol. 32(8), pages 1452-1467, August.
- Laetitia Lepetit & Emmanuelle Nys & Philippe Rous & Amine Tarazi, 2008. "Bank income structure and risk: An empirical analysis of European banks," Post-Print hal-00844820, HAL.
- Jordan, Dan J. & Rice, Douglas & Sanchez, Jacques & Wort, Donald H., 2011. "Explaining bank market-to-book ratios: Evidence from 2006 to 2009," Journal of Banking & Finance, Elsevier, vol. 35(8), pages 2047-2055, August.
- Wilson, Linus, 2012. "Anchoring bias in the TARP warrant negotiations," Journal of Economics and Business, Elsevier, vol. 64(1), pages 63-76.
- Linus Wilson & Yan Wu, 2010. "Common (stock) sense about risk-shifting and bank bailouts," Financial Markets and Portfolio Management, Springer, vol. 24(1), pages 3-29, March.
- Cornett, Marcia Millon & McNutt, Jamie John & Tehranian, Hassan, 2006. "Performance Changes around Bank Mergers: Revenue Enhancements versus Cost Reductions," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 38(4), pages 1013-1050, June.
- Stiroh, Kevin J. & Rumble, Adrienne, 2006. "The dark side of diversification: The case of US financial holding companies," Journal of Banking & Finance, Elsevier, vol. 30(8), pages 2131-2161, August.
- Cornett, Marcia Millon & McNutt, Jamie John & Strahan, Philip E. & Tehranian, Hassan, 2011. "Liquidity risk management and credit supply in the financial crisis," Journal of Financial Economics, Elsevier, vol. 101(2), pages 297-312, August.
- Ivashina, Victoria & Scharfstein, David, 2010. "Bank lending during the financial crisis of 2008," Journal of Financial Economics, Elsevier, vol. 97(3), pages 319-338, September.
When requesting a correction, please mention this item's handle: RePEc:eee:jbfina:v:37:y:2013:i:3:p:730-746. 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: (Zhang, Lei)
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.