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Why don't banks take stock?

  • Mitchell Berlin

Banks in the United States are forbidden to hold stock in nonfinancial firms under most circumstances. The same is not true of banks in other countries. But are U.S. banks really shackled compared with their foreign counterparts? Do such restrictions make a difference in banks' behavior? Mitchell Berlin discusses these and other questions about banks' financial claims in nonfinancial firms and offers some possible answers.

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Article provided by Federal Reserve Bank of Philadelphia in its journal Business Review.

Volume (Year): (2000)
Issue (Month): May ()
Pages: 3-15

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Handle: RePEc:fip:fedpbr:y:2000:i:may:p:3-15
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  1. Billett, Matthew T & Flannery, Mark J & Garfinkel, Jon A, 1995. " The Effect of Lender Identity on a Borrowing Firm's Equity Return," Journal of Finance, American Finance Association, vol. 50(2), pages 699-718, June.
  2. Mitchell Berlin & Loretta J. Mester, 2000. "Optimal financial contracts for large investors: the role of lender liability," Working Papers 00-1, Federal Reserve Bank of Philadelphia.
  3. Mitchell Berlin & Kose John & Anthony Saunders, 1995. "Bank equity stakes in borrowing firms and financial distress," Working Papers 96-1, Federal Reserve Bank of Philadelphia.
  4. Mathias Dewatripont & Jean Tirole, 1994. "A theory of debt and equity: diversity of securities and manager-shareholder congruence," ULB Institutional Repository 2013/9593, ULB -- Universite Libre de Bruxelles.
  5. Sheard, Paul, 1989. "The main bank system and corporate monitoring and control in Japan," Journal of Economic Behavior & Organization, Elsevier, vol. 11(3), pages 399-422, May.
  6. Berglof, Erik & von Thadden, Ernst-Ludwig, 1994. "Short-Term versus Long-Term Interests: Capital Structure with Multiple Investors," The Quarterly Journal of Economics, MIT Press, vol. 109(4), pages 1055-84, November.
  7. Loretta J. Mester, 1992. "Banking and commerce: a dangerous liaison?," Business Review, Federal Reserve Bank of Philadelphia, issue May, pages 17-29.
  8. James, Christopher, 1996. " Bank Debt Restructurings and the Composition of Exchange Offers in Financial Distress," Journal of Finance, American Finance Association, vol. 51(2), pages 711-27, June.
  9. Langohr, Herwig & Santomero, Anthony M, 1985. "The Extent of Equity Investment by European Banks: A Note," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 17(2), pages 243-52, May.
  10. W. Carl Kester, 1991. "Japanese Corporate Governance And The Conservation Of Value In Financial Distress," Journal of Applied Corporate Finance, Morgan Stanley, vol. 4(2), pages 98-105.
  11. Mitchell Berlin, 1996. "For better and for worse: three lending relationships," Business Review, Federal Reserve Bank of Philadelphia, issue Nov, pages 3-12.
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