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Birth, growth, and life or death of newly chartered banks

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  • Robert DeYoung

Abstract

Thousands of new commercial banks have been chartered in the U.S. over the past two decades. This article documents how the financial characteristics of new banks evolve over time, develops a simple theory of why and when new banks fail, and tests the theory using a variety of methods.

Suggested Citation

  • Robert DeYoung, 1999. "Birth, growth, and life or death of newly chartered banks," Economic Perspectives, Federal Reserve Bank of Chicago, vol. 23(Q III), pages 18-35.
    • Handle: RePEc:fip:fedhep:y:1999:i:qiii:p:18-35:n:v.23no.3
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    References listed on IDEAS

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    1. Cole, Rebel A. & Gunther, Jeffery W., 1995. "Separating the likelihood and timing of bank failure," Journal of Banking & Finance, Elsevier, vol. 19(6), pages 1073-1089, September.
    2. Wheelock, David C & Wilson, Paul W, 1995. "Explaining Bank Failures: Deposit Insurance, Regulation, and Efficiency," The Review of Economics and Statistics, MIT Press, vol. 77(4), pages 689-700, November.
    3. DeYoung, Robert & Hasan, Iftekhar, 1998. "The performance of de novo commercial banks: A profit efficiency approach," Journal of Banking & Finance, Elsevier, vol. 22(5), pages 565-587, May.
    4. DeYoung, Robert & Goldberg, Lawrence G. & White, Lawrence J., 1999. "Youth, adolescence, and maturity of banks: Credit availability to small business in an era of banking consolidation," Journal of Banking & Finance, Elsevier, vol. 23(2-4), pages 463-492, February.
    5. Patricia Brislin & Anthony M. Santomero, 1991. "De novo banking in the third district," Business Review, Federal Reserve Bank of Philadelphia, issue Jan, pages 3-12.
    6. Brewer, Elijah III, 1989. "Relationship between bank holding company risk and nonbank activity," Journal of Economics and Business, Elsevier, vol. 41(4), pages 337-353, November.
    7. William C. Hunter & Aruna Srinivasan, 1990. "Determinants of de novo bank performance," Economic Review, Federal Reserve Bank of Atlanta, issue Mar, pages 14-25.
    8. Allen N. Berger & Seth D. Bonime & Lawrence G. Goldberg & Lawrence J. White, 1999. "The dynamics of market entry: the effects of mergers and acquisitions on de novo entry in banking," Proceedings 612, Federal Reserve Bank of Chicago.
    9. 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, vol. 27(Q I), pages 21-31.
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    Citations

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    Cited by:

    1. Robert DeYoung, 2000. "For how long are newly chartered banks financially fragile?," Working Paper Series WP-00-9, Federal Reserve Bank of Chicago.
    2. Michal Skorepa & Jakub Seidler, 2015. "Capital buffers based on banks’ domestic systemic importance: selected issues," Journal of Financial Economic Policy, Emerald Group Publishing Limited, vol. 7(3), pages 207-220, August.
    3. Yongil Jeon & Stephen M. Miller, 2002. "An 'Ideal' Deconposition of Industry Dynamics: An Application to the Nationwide and State Level U.S. Banking Industry," Working papers 2002-23, University of Connecticut, Department of Economics.
    4. R. Alton Gilbert & Andrew P. Meyer & Mark D. Vaughan, 2006. "Can feedback from the jumbo CD market improve bank surveillance?," Economic Quarterly, Federal Reserve Bank of Richmond, vol. 92(Spr), pages 135-175.
    5. Yongil Jeon & Stephen M. Miller, 2002. "Explaining U.S. Commercial Bank Births, Deaths, and Marriages," Working papers 2002-27, University of Connecticut, Department of Economics.
    6. Yongil Jeon & Stephen M. Miller, 2002. "Has Deregulation Affected Births, Deaths, and Marriages in the U.S. Commercial Banking Industry?," Working papers 2002-26, University of Connecticut, Department of Economics.
    7. Lin, Ching-Chung & Yang, Shou-Lin, 2016. "Bank fundamentals, economic conditions, and bank failures in East Asian countries," Economic Modelling, Elsevier, vol. 52(PB), pages 960-966.
    8. Pavlos Almanidis & Robin C. Sickles, 2016. "Banking Crises, Early Warning Models, and Efficiency," International Series in Operations Research & Management Science, in: Juan Aparicio & C. A. Knox Lovell & Jesus T. Pastor (ed.), Advances in Efficiency and Productivity, chapter 0, pages 331-364, Springer.
    9. Robert DeYoung & Iftekhar Hasan & William C. Hunter, 1999. "The Determinants of De Novo Bank Survival," New York University, Leonard N. Stern School Finance Department Working Paper Seires 99-066, New York University, Leonard N. Stern School of Business-.
    10. Karen Schnatterly & Brent B. Clark & John Howe & Michael L. DeVaughn, 2019. "Regulatory and governance impacts on bank risk-taking," Risk Management, Palgrave Macmillan, vol. 21(2), pages 99-122, June.
    11. R. Alton Gilbert & Andrew P. Meyer & Mark D. Vaughan, 2002. "Could a CAMELS downgrade model improve off-site surveillance?," Review, Federal Reserve Bank of St. Louis, vol. 84(Jan.), pages 47-63.

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    Keywords

    bank charters; Bank failures;

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