Showing papers by "Armen Hovakimian published in 1996"
TL;DR: The authors assesses the success regulators had in controlling risk-shifting by U.S. banks during 1985-1994 and conclude that regulators failed to prevent large banks from shifting risk to the FDIC.
Abstract: Mispriced and misadministered deposit insurance imparts risk-shifting incentives to U.S. banks. Regulators are expected to monitor and discipline increases in bank risk exposure that would transfer wealth from the FDIC to bank stockholders. This paper assesses the success regulators had in controlling risk-shifting by U.S. banks during 1985-1994. In contrast to single-equation estimates developed from the option model by others, our simultaneous-equation evidence indicates that regulators failed to prevent large U.S. banks from shifting risk to the FDIC. Moreover, at the margin, banks that are undercapitalized shifted risk more effectively than other sample banks.
11 citations
Posted Content•
TL;DR: The authors assesses the success regulators had in controlling risk-shifting by U.S. banks during 1985-1994 and conclude that regulators failed to prevent large banks from shifting risk to the FDIC.
Abstract: Mispriced and misadministered deposit insurance imparts risk-shifting incentives to U.S. banks. Regulators are expected to monitor and discipline increases in bank risk exposure that would transfer wealth from the FDIC to bank stockholders. This paper assesses the success regulators had in controlling risk-shifting by U.S. banks during 1985-1994. In contrast to single-equation estimates developed from the option model by others, our simultaneous-equation evidence indicates that regulators failed to prevent large U.S. banks from shifting risk to the FDIC. Moreover, at the margin, banks that are undercapitalized shifted risk more effectively than other sample banks.
2 citations
Posted Content•
TL;DR: The authors assesses the success regulators had in controlling risk-shifting by U.S. banks during 1985-1994 and conclude that regulators failed to prevent large banks from shifting risk to the FDIC.
Abstract: Mispriced and misadministered deposit insurance imparts risk-shifting incentives to U.S. banks. Regulators are expected to monitor and discipline increases in bank risk exposure that would transfer wealth from the FDIC to bank stockholders. This paper assesses the success regulators had in controlling risk-shifting by U.S. banks during 1985-1994. In contrast to single-equation estimates developed from the option model by others, our simultaneous-equation evidence indicates that regulators failed to prevent large U.S. banks from shifting risk to the FDIC. Moreover, at the margin, banks that are undercapitalized shifted risk more effectively than other sample banks.
1 citations