Regulation and Supervision of Banks

Edited by Maximilian J.B. Hall, Reader in Banking and Financial Regulation, Loughborough University, UK

'As the custodians of the UK's new single financial services regulator we at the FSA are keen to learn from the academic world. Indeed, we would like to encourage more academic research on the subject of financial regulation. So we welcome the increasing breadth and depth of work in this area, as reflected in these useful and thought provoking volumes.'

• Contents:Volume I: The Case for and Against Banking RegulationAcknowledgementsPrefaceMaximilian J.B. HallIntroduction Maximilian J.B. Hall1. Joseph Aharony and Itzhak Swary (1996), ‘Additional Evidence on the Information-based Contagion Effects of Bank Failures’2. Robert B. Avery, Terrence M. Belton and Michael A. Goldberg (1988), ‘Market Discipline in Regulating Bank Risk: New Evidence from the Capital Markets’3. George J. Benston and George G. Kaufman (1995), ‘Is the Banking and Payments System Fragile?’4. George J. Benston and George G. Kaufman (1996), ‘The Appropriate Role of Bank Regulation’5. Ben S. Bernanke (1983), ‘Nonmonetary Effects of the Financial Crisis in the Propagation of the Great Depression’6. Ben Bernanke and Mark Gertler (1990), ‘Financial Fragility and Economic Performance’7. Sudipto Bhattacharya, Arnoud W.A. Boot and Anjan V. Thakor (1998), ‘The Economics of Bank Regulation’8. Matthew T. Billett, Jon A. Garfinkel and Edward S. O’Neal (1998), ‘The Cost of Market versus Regulatory Discipline in Banking’9. Michael D. Bordo (1992), ‘The Lender of Last Resort: Some Insights from History’10. Charles W. Calomiris and Charles M. Kahn (1991), ‘The Role of Demandable Debt in Structuring Optimal Banking Arrangements’11. Charles W. Calomiris and Joseph R. Mason (1997), ‘Contagion and Bank Failures During the Great Depression: The June 1932 Chicago Banking Panic’12. V.V. Chari and Ravi Jagannathan (1988), ‘Banking Panics, Information, and Rational Expectations Equilibrium’13. Douglas W. Diamond and Philip H. Dybvig (1983), ‘Bank Runs, Deposit Insurance, and Liquidity’14. Kevin Dowd (1994), ‘Competitive Banking, Bankers’ Clubs, and Bank Regulation’15. Kevin Dowd (1996), ‘The Case for Financial Laissez-Faire’16. Robert A. Eisenbeis (1995), ‘Private Sector Solutions to Payments System Fragility’17. David M. Ellis and Mark J. Flannery (1992), ‘Does the Debt Market Assess Large Banks’ Risk? Time Series Evidence from Money Center CDs’18. Eugene F. Fama (1985), ‘What’s Different About Banks?’19. Mark J. Flannery (1996), ‘Financial Crises, Payment System Problems, and Discount Window Lending’20. Mark J. Flannery (1998), ‘Using Market Information in Prudential Bank Supervision: A Review of the U.S. Empirical Evidence’21. Mark J. Flannery and Sorin M. Sorescu (1996), ‘Evidence of Bank Market Discipline in Subordinated Debenture Yields: 1983–1991’22. C.A.E. Goodhart (1987), ‘Why Do Banks Need a Central Bank?’23. Gary Gorton (1985), ‘Bank Suspension of Convertibility’24. Gary Gorton and Anthony M. Santomero (1990), ‘Market Discipline and Bank Subordinated Debt’25. Iftekhar Hasan and Gerald P. Dwyer, Jr. (1994), ‘Bank Runs in the Free Banking Period’26. Christopher James (1991), ‘The Losses Realized in Bank Failures’27. G.D. Koppenhaver and Roger D. Stover (1994), ‘Standby Letters of Credit and Bank Capital: Evidence of Market Discipline’28. David Miles (1995), ‘Optimal Regulation of Deposit Taking Financial Intermediaries’29. Sangkyun Park (1991), ‘Bank Failure Contagion in Historical Perspective’30. Sangkyun Park and Stavros Peristiani (1998), ‘Market Discipline by Thrift Depositors’31. Andrew Postlewaite and Xavier Vives (1987), ‘Bank Runs as an Equilibrium Phenomenon’32. Myron B. Slovin, Marie E. Sushka and John A. Polonchek (1993), ‘The Value of Bank Durability: Borrowers as Bank Stakeholders’Name IndexVolume II: Deposit InsuranceAcknowledgementsPrefaceMaximilian J.B. HallIntroduction Maximilian J.B. Hall1. Sankarshan Acharya and Jean-François Dreyfus (1989), ‘Optimal Bank Reorganization Policies and the Pricing of Federal Deposit Insurance’2. Linda Allen and Anthony Saunders (1993), ‘Forbearance and Valuation of Deposit Insurance as a Callable Put’3. Robert B. Avery and Allen N. Berger (1991), ‘Risk-based Capital and Deposit Insurance Reform’4. George J. Benston and George G. Kaufman (1993), ‘Deposit Insurance Reform: A Functional Approach: A Comment’5. George J. Benston and George G. Kaufman (1997), ‘FDICIA After Five Years’6. Mitchell Berlin, Anthony Saunders and Gregory F. Udell (1991), ‘Deposit Insurance Reform: What Are the Issues and What Needs to be Fixed?’7. Fischer Black and Myron Scholes (1973), ‘The Pricing of Options and Corporate Liabilities’8. Elijah Brewer III and Thomas H. Modschean (1994), ‘An Empirical Test of the Incentive Effects of Deposit Insurance: The Case of Junk Bonds at Savings and Loan Associations’9. Stephen A. Buser, Andrew H. Chen and Edward J. Kane (1981), ‘Federal Deposit Insurance, Regulatory Policy, and Optimal Bank Capital’10. Yuk-shee Chan, Stuart I. Greenbaum and Anjan V. Thakor (1992), ‘Is Fairly Priced Deposit Insurance Possible?’11. Roger Craine (1995), ‘Fairly Priced Deposit Insurance and Bank Charter Policy’12. Douglas W. Diamond and Philip H. Dybvig (1986), ‘Banking Theory, Deposit Insurance, and Bank Regulation’13. Jean-François Dreyfus, Anthony Saunders and Linda Allen (1994), ‘Deposit Insurance and Regulatory Forbearance: Are Caps on Insured Deposits Optimal?’14. Jin-Chuan Duan, Arthur F. Moreau and C.W. Sealey (1992), ‘Fixed-rate Deposit Insurance and Risk-shifting Behavior at Commercial Banks’15. Mark J. Flannery (1991), ‘Pricing Deposit Insurance When the Insurer Measures Bank Risk With Error’16. Mark J. Flannery (1993), ‘Deposit Insurance Reform: A Functional Approach: A Comment’17. Maximilian John Bettles Hall (1999), ‘Deposit Insurance Reform in Japan: Better Late Than Never?’18. Paul M. Horvitz (1983), ‘The Case Against Risk-related Deposit Insurance Premiums’19. Kose John, Teresa A. John and Lemma W. Senbet (1991), ‘Risk-shifting Incentives of Depository Institutions: A New Perspective on Federal Deposit Insurance Reform’20. Edward J. Kane (1986), ‘Appearance and Reality in Deposit Insurance: The Case for Reform’21. Edward J. Kane (1995), ‘Three Paradigms for the Role of Capitalization Requirements in Insured Financial Institutions’22. Sarah B. Kendall and Mark E. Levonian (1991), ‘A Simple Approach to Better Deposit Insurance Pricing’23. Alan J. Marcus and Israel Shaked (1984), ‘The Valuation of FDIC Deposit Insurance Using Option-pricing Estimates’24. J. Huston McCulloch (1985), ‘Interest-risk Sensitive Deposit Insurance Premia: Stable ACH Estimates’25. Robert C. Merton (1977), ‘An Analytic Derivation of the Cost of Deposit Insurance and Loan Guarantees: An Application of Modern Option Pricing Theory’26. Robert C. Merton (1978), ‘On the Cost of Deposit Insurance When There Are Surveillance Costs’27. Robert C. Merton and Zvi Bodie (1993), ‘Deposit Insurance Reform: A Functional Approach’28. George G. Pennacchi (1987), ‘Alternative Forms of Deposit Insurance: Pricing and Bank Incentive Issues’29. George G. Pennacchi (1987), ‘A Reexamination of the Over- (or Under-) Pricing of Deposit Insurance’30. Ehud I. Ronn and Avinash K. Verma (1986), ‘Pricing Risk-adjusted Deposit Insurance: An Option-based Model’31. James B. Thomson (1987), ‘The Use of Market Information in Pricing Deposit Insurance’Name IndexVolume III: The Regulation of Bank CapitalAcknowledgementsPrefaceMaximilian J.B. HallIntroduction Maximilian J.B. HallPART ITHE ROLE OF BANK CAPITAL AND CAPITAL REGULATION1. Allen N. Berger, Richard J. Herring and Giorgio P. Szegö (1995), ‘The Role of Capital in Financial Institutions’2. Roger D. Blair and Arnold A. Heggestad (1978), ‘Bank Portfolio Regulation and the Probability of Bank Failure’3. Jürg Blum and Martin Hellwig (1995), ‘The Macroeconomic Implications of Capital Adequacy Requirements for Banks’4. Mark J. Flannery (1989), ‘Capital Regulation and Insured Banks’ Choice of Individual Loan Default Risks’5. Frederick T. Furlong and Michael C. Keeley (1989), ‘Capital Regulation and Bank Risk-taking: A Note’6. Gerard Gennotte and David Pyle (1991), ‘Capital Controls and Bank Risk’7. Yehuda Kahane (1977), ‘Capital Adequacy and the Regulation of Financial Intermediaries’8. Michael C. Keeley and Frederick T. Furlong (1990), ‘A Reexamination of Mean-variance Analysis of Bank Capital Regulation’9. Daesik Kim and Anthony M. Santomero (1988), ‘Risk in Banking and Capital Regulation’10. Michael Koehn and Anthony M. Santomero (1980), ‘Regulation of Bank Capital and Portfolio Risk’11. Merton H. Miller (1995), ‘Do the M&M Propositions Apply to Banks?’12. Joe Peek and Eric S. Rosengren (1997), ‘Derivatives Activity at Troubled Banks’13. John J. Pringle (1974), ‘The Capital Decision in Commercial Banks’14. David H. Pyle (1986), ‘Capital Regulation and Deposit Insurance’15. Jean-Charles Rochet (1992), ‘Capital Requirements and the Behaviour of Commercial Banks’16. Anthony M. Santomero and Ronald D. Watson (1977), ‘Determining an Optimal Capital Standard for the Banking Industry’17. Jean Tirole (1994), ‘On Banking and Intermediation’PART IITHE BASLE CAPITAL ACCORD18. Allen N. Berger and Gregory F. Udell (1994), ‘Did Risk-based Capital Allocate Bank Credit and Cause a “Credit Crunch” in the United States?’19. Jürg Blum (1999), ‘Do Capital Adequacy Requirements Reduce Risks in Banking?’20. Michael Bowe and Maximilian J.B. Hall (1998), ‘A Comparison of Capital Standards and Proprietary Surveillance as Mechanisms for Regulating Financial Market Risk in the EU’21. Maximilian J.B. Hall (1992), ‘Implementation of the BIS "Rules" on Capital Adequacy Assessment: A Comparative Study of the Approaches Adopted in the UK, the USA and Japan’22. Maximilian J.B. Hall (1994), ‘The Measurement and Assessment of Capital Adequacy for Banks: A Critique of the G-10 Agreement’23. Maximilian J.B. Hall (1997), ‘Banking Regulation in the European Union: Some Issues and Concerns’24. Diana Hancock and James A. Wilcox (1998), ‘The "Credit Crunch" and the Availability of Credit to Small Business’25. Patricia Jackson and William Perraudin (2000), ‘Regulatory Implications of Credit Risk Modelling’26. Kevin Jacques and Peter Nigro (1997), ‘Risk-based Capital, Portfolio Risk, and Bank Capital: A Simultaneous Equations Approach’27. Julapa Jagtiani, Anthony Saunders and Gregory Udell (1995), ‘The Effect of Bank Capital Requirements on Bank Off-balance Sheet Financial Innovations’28. David Jones (2000), ‘Emerging Problems with the Basel Capital Accord: Regulatory Capital Arbitrage and Related Issues’29. Sangkyun Park (1997), ‘Risk-taking Behavior of Banks under Regulation’30. Joe Peek and Eric Rosengren (1995), ‘Bank Regulation and the Credit Crunch’31. Joe Peek and Eric Rosengren (1995), ‘The Capital Crunch: Neither a Borrower nor a Lender Be’32. Stephen M. Schaefer (1990), ‘The Regulation of Banks and Securities Firms’33. Ronald E. Shrieves and Drew Dahl (1992), ‘The Relationship Between Risk and Capital in Commercial Banks’34. John D. Wagster (1996), ‘Impact of the 1988 Basle Accord on International Banks’35. John D. Wagster (1999), ‘The Basle Accord of 1988 and the International Credit Crunch of 1989–1992’Name IndexVolume IV: Regulation and Efficiency in Banking AcknowledgementsPrefaceMaximilian J.B. HallIntroduction Maximilian J.B. Hall1. Sigbjørn Atle Berg, Finn R. Førsund, Lennart Hjalmarsson and Matti Suominen (1993), ‘Banking Efficiency in the Nordic Countries’2. Sigbjørn Atle Berg, Finn R. Førsund and Eilev S. Jansen (1992), ‘Malmquist Indices of Productivity Growth during the Deregulation of Norwegian Banking, 1980–89’3.Sigbjørn Atle Berg and Moshe Kim (1994), ‘Oligopolistic Interdependence and the Structure of Production in Banking: An Empirical Evaluation’4. Allen N. Berger (1995), ‘The Profit-structure Relationship in Banking – Tests of Market-power and Efficient-structure Hypotheses’5. Allen N. Berger and Robert DeYoung (1997), ‘Problem Loans and Cost Efficiency in Commercial Banks’6. Allen N. Berger, Gerald A. Hanweck and David B. Humphrey (1987), ‘Competitive Viability in Banking: Scale, Scope, and Product Mix Economies’7. Allen N. Berger and David B. Humphrey (1991), ‘The Dominance of Inefficiencies Over Scale and Product Mix Economies in Banking’8. Allen N. Berger and David B. Humphrey (1997), ‘Efficiency of Financial Institutions: International Survey and Directions for Future Research’9. Allen N. Berger, William C. Hunter and Stephen G. Timme (1993), ‘The Efficiency of Financial Institutions: A Review and Preview of Research Past, Present, and Future’10. Allen N. Berger and Loretta J. Mester (1997), ‘Inside the Black Box: What Explains Differences in the Efficiencies of Financial Institutions?’11. A. Sinan Cebenoyan, Elizabeth S. Cooperman and Charles A. Register (1993), ‘Firm Efficiency and the Regulatory Closure of S & Ls: An Empirical Investigation’12. Robert DeYoung, Iftekhar Hasan and Bruce Kirchhoff (1998), ‘The Impact of Out-of-state Entry on the Cost Efficiency of Local Commercial Banks’13. Gary D. Ferrier, Shawna Grosskopf, Kathy J. Hayes and Suthathip Yaisawarng (1993), ‘Economies of Diversification in the Banking Industry: A Frontier Approach’14. R. Alton Gilbert and Paul W. Wilson (1998), ‘Effects of Deregulation on the Productivity of Korean Banks’15. E. Grifell-Tatjé and C.A.K. Lovell (1996), ‘Deregulation and Productivity Decline: The Case of Spanish Savings Banks’16. S. Grosskopf (1996), ‘Statistical Inference and Nonparametric Efficiency: A Selective Survey’17. Joseph P. Hughes, William Lang, Loretta J. Mester and Choon-Geol Moon (1996), ‘Efficient Banking Under Interstate Branching’18. Joseph P. Hughes and Loretta J. Mester (1993), ‘A Quality and Risk-adjusted Cost Function for Banks: Evidence on the "Too-big-to-Fail" Doctrine’19. David B. Humphrey and Lawrence B. Pulley (1997), ‘Banks’ Responses to Deregulation: Profits, Technology, and Efficiency’20. Jonathan E. Leightner and C.A. Knox Lovell (1998), ‘The Impact of Financial Liberalization on the Performance of Thai Banks’21. Karlyn Mitchell and Nur M. Onvural (1996), ‘Economies of Scale and Scope at Large Commercial Banks: Evidence from the Fourier Flexible Functional Form’22. Joseph A. Newman and Ronald E. Shrieves (1993), ‘The Multibank Holding Company Effect on Cost Efficiency in Banking’23. José Manuel Pastor, Francisco Pérez and Javier Quesada (1997), ‘Efficiency Analysis in Banking Firms: An International Comparison’24. Stavros Peristiani (1997), ‘Do Mergers Improve the X-efficiency and Scale Efficiency of U.S. Banks? Evidence from the 1980s’25. Andrea Resti (1998), ‘Regulation Can Foster Mergers, Can Mergers Foster Efficiency? The Italian Case’26. Osman Zaim (1995), ‘The Effect of Financial Liberalization on the Efficiency of Turkish Commercial Banks’Name Index