IDEAS home Printed from https://ideas.repec.org/a/taf/apeclt/v3y1996i5p293-297.html
   My bibliography  Save this article

The effect of charter status on savings and loan resolution costs

Author

Listed:
  • Steven Caudill
  • Daniel Gropper
  • Tracy Stephens

Abstract

Beginning in 1933, with the establishment of the first federally chartered savings and loan, the thrift industry has functioned under a dual regulatory system. This paper addresses the question of whether this moral hazard, created by regulatory competition, increased the resolution costs of state chartered institutions relative to the federally chartered thrifts. Resolution costs are those expended by the Resolution Trust Company (RTC) to handle a defunct thrift. This study shows, using a variety of methods and statistical tests, that the charter orientation of a defunct savings and loan had a significant effect on the resolution costs associated with the handling of the thrift by the RTC. Therefore, it can be stated that this dual regulation of the savings and loan industry created a moral hazard in which there were incentives for regulators to provide broader investment powers and less strict regulation to attract thrifts. Because state regulators tended to provide less strict regulations, the resolution costs for defunct state chartered savings and loans were larger than for their federally chartered counterparts.

Suggested Citation

  • Steven Caudill & Daniel Gropper & Tracy Stephens, 1996. "The effect of charter status on savings and loan resolution costs," Applied Economics Letters, Taylor & Francis Journals, vol. 3(5), pages 293-297.
    • Handle: RePEc:taf:apeclt:v:3:y:1996:i:5:p:293-297
    DOI: 10.1080/135048596356384
    as

    Download full text from publisher

    File URL: http://www.informaworld.com/openurl?genre=article&doi=10.1080/135048596356384&magic=repec&7C&7C8674ECAB8BB840C6AD35DC6213A474B5
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/135048596356384?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Rebel A. Cole & Joseph A. McKenzie & Lawrence J. White, 1990. "The causes and costs of thrift institution failures: a structure- behavior-outcomes approach," Financial Industry Studies Working Paper 90-5, Federal Reserve Bank of Dallas.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Rebel A. Cole & Joseph A. McKenzie, 1994. "Thrift Asset‐Class Returns and the Efficient Diversification of Thrift Institution Portfolios," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 22(1), pages 95-116, March.
    2. A. Sinan Cebenoyan & Elizabeth S. Cooperman & Charles A. Register & Sylvia C. Hudgins, 1998. "Cost Inefficiency and the Holding of Non‐traditional Assets by Solvent Stock Thrifts," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 26(4), pages 695-718, December.
    3. Scott Deacle & Elyas Elyasiani, 2014. "Real estate investment by Bank Holding Companies and their risk and return: nonparametric and GARCH procedures," Applied Financial Economics, Taylor & Francis Journals, vol. 24(13), pages 907-926, July.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:apeclt:v:3:y:1996:i:5:p:293-297. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/RAEL20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.