IDEAS home Printed from https://ideas.repec.org/a/taf/apfiec/v11y2001i2p147-155.html
   My bibliography  Save this article

Charter status, ownership type and efficiency in the thrift industry

Author

Listed:
  • Janice Caudill
  • Steven Caudill
  • Daniel Gropper

Abstract

Deregulation during the 1980s allowed savings and loan associations to undertake many of the same activities as mutual savings banks, so that competition among thrifts increased, and they became more homogeneous in nature. At the same time, according to agency theory, mutual institutions should experience less efficient operations than stock institutions due to differences in monitoring and compensation of management. The purpose of this study, then, is two fold: first, to determine whether mutual savings banks exhibit the same cost behaviour as savings and loans; and second, to determine whether mutual institutions are less cost efficient than stock institutions. To compare cost structures and cost efficiencies, a three input, three output, translog cost frontier is estimated for mutual savings banks, mutual S&Ls, and stock S&Ls. Approximately 1500 observations, restricted to the states in which mutual savings banks are chartered, are extracted from the 1990 OTS data to be used in the estimation. Each type of institution is found to have a unique cost function. The data are then used in a second regression to determine which characteristics are correlated with the inefficiency scores. It appears that mutual savings banks do have a different cost structure than savings and loans. As well, the comparison of stock versus mutual savings and loans reveals that mutuals exhibit cost efficiency, a result that contradicts agency theory.

Suggested Citation

  • Janice Caudill & Steven Caudill & Daniel Gropper, 2001. "Charter status, ownership type and efficiency in the thrift industry," Applied Financial Economics, Taylor & Francis Journals, vol. 11(2), pages 147-155.
  • Handle: RePEc:taf:apfiec:v:11:y:2001:i:2:p:147-155
    DOI: 10.1080/096031001750071532
    as

    Download full text from publisher

    File URL: http://www.tandfonline.com/doi/abs/10.1080/096031001750071532
    Download Restriction: Access to full text is restricted to subscribers.

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

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. J. Colin Glass & Donal McKillop, 2006. "The impact of differing operating environments on US Credit Union Performance, 1993-2001," Applied Financial Economics, Taylor & Francis Journals, vol. 16(17), pages 1285-1300.
    2. Heffernan, Shelagh, 2005. "The effect of UK building society conversion on pricing behaviour," Journal of Banking & Finance, Elsevier, vol. 29(3), pages 779-797, March.

    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:apfiec:v:11:y:2001:i:2:p:147-155. 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: (Chris Longhurst). General contact details of provider: http://www.tandfonline.com/RAFE20 .

    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.

    We have no references for this item. You can help adding them by using 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.