Building an incentive-compatible safety net

Article Abstract:

The federal government faces a considerable, unique set of challenges in constructing and managing a set of policies designed to protect banks from adverse shocks, also called a bank safety net, whose scope and costs can be enormous. It is argued that bank safety net policies must be crafted to maximize welfare that is controlled by economic and political constraints. A viable safety net mechanism is proposed that introduces credible market discipline into government deposit insurance in a manner that is most likely to survive adverse economic shocks and their political consequences.

Administration of General Economic Programs, Intnl Economic Policy, Methods, Models, Economic policy, National government, International economic relations, Monetary policy, Industry regulations, Government regulation of business, Trade regulation, Federal government

The poor performance of foreign bank subsidiaries: were the problems acquired or created?

Article Abstract:

The foreign acquisitions of US banks around the time of ownership change is examined to determine whether the observed poor performance of foreign subsidiaries are preexisting traits of the target bank or are the result of changes in business strategy. The evidence gathered shows that many of the problems were already present when the acquisition was completed. It is also worth noting that changes in business strategy by the foreign owners were generally failures in turning around a bank's poor performance level.

Analysis, Evaluation, Mergers, acquisitions and divestments, Bank mergers, Foreign banks

Bank regulation and the credit crunch

Article Abstract:

The relationship between bank regulation and the availability of bank loans is discussed. The contraction of bank loans is analyzed according to two likely causes: regulatory activities and voluntary action because of low capital-to-asset ratios. It is shown that the shrinkage is faster when it is brought about by the latter cause. Likewise, such shrinkage tended to occur more often in primary loans to customers exclusively dependent on the banking system for their financial needs.

Research, Bank loans