Open AccessPosted Content
The Corporate Governance of Banks
Jonathan R. Macey,Maureen O'Hara +1 more
TLDR
In this paper, the authors argue that commercial banks pose unique corporate governance problems for managers and regulators, as well as for claimants on the banks' cash flows, such as investors and depositors.Abstract:
The study argues that commercial banks pose unique corporate governance problems for managers and regulators, as well as for claimants on the banks' cash flows, such as investors and depositors The authors support the general principle that fiduciary duties should be owed exclusively to shareholders However, in the special case of banks, they contend that the scope of the fiduciary duties and obligations of officers and directors should be broadened to include creditors In particular, the authors call on bank directors to take solvency risk explicitly and systematically into account when making decisions or else face personal liability for failure to do soread more
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Predicting Bank Failure Using Regulatory Accounting Data
Abstract: Predicting Bank Failure Using Regulatory Accounting Data by Helen Pruitt MBA, Amberton University, 1993 BBA, University of Texas at Arlington, 1986 Doctoral Study Submitted in Partial Fulfillment of the Requirements for the Degree of Doctor of Business Administration Walden University August 2017 Abstract A liquidity shortfall in the United States triggered the bankruptcy of several large commercial banks, and bank failures continue to occur, with 50 banks failing between 2013 and 2015. Therefore, it is critical banking regulators understand the correlates of financial performance measures and the potential for banks to fail. In this study, binary logistic regression was employed to assess the theoretical proposition that banks with higher nonperforming loans, lower Tier 1 leverage capital, and higher noncore funding dependence are more likely to fail. Archival data ranging from 2012–2015 were collected from 250 commercial banks listed on the Federal Deposit Insurance Corporation’s website. The results of the logistic regression analyses indicated the model was able to predict bank failure, X(3, N = 250) = 218.86, p < .001. Nonperforming loans, Tier 1 leverage capital, and noncore funding were all statistically significant, with Tier 1 leverage capital (β = -1.485), p < .001) accounting for a higher contribution to the model than nonperforming loans (β = .354, p < .001) and noncore funding dependence (β = .057, p = .015). The implication for positive social change of this study includes the potential for bank regulators to enhance job security, wealth creation, and lending within the community by working with bank managers to develop more timely corrective action plans to alleviate the risk of bank failure.A liquidity shortfall in the United States triggered the bankruptcy of several large commercial banks, and bank failures continue to occur, with 50 banks failing between 2013 and 2015. Therefore, it is critical banking regulators understand the correlates of financial performance measures and the potential for banks to fail. In this study, binary logistic regression was employed to assess the theoretical proposition that banks with higher nonperforming loans, lower Tier 1 leverage capital, and higher noncore funding dependence are more likely to fail. Archival data ranging from 2012–2015 were collected from 250 commercial banks listed on the Federal Deposit Insurance Corporation’s website. The results of the logistic regression analyses indicated the model was able to predict bank failure, X(3, N = 250) = 218.86, p < .001. Nonperforming loans, Tier 1 leverage capital, and noncore funding were all statistically significant, with Tier 1 leverage capital (β = -1.485), p < .001) accounting for a higher contribution to the model than nonperforming loans (β = .354, p < .001) and noncore funding dependence (β = .057, p = .015). The implication for positive social change of this study includes the potential for bank regulators to enhance job security, wealth creation, and lending within the community by working with bank managers to develop more timely corrective action plans to alleviate the risk of bank failure. Predicting Bank Failure Using Regulatory Accounting Data by Helen Pruitt MBA, Amberton University, 1993 BBA, University of Texas at Arlington, 1986 Doctoral Study Submitted in Partial Fulfillment of the Requirements for the Degree of Doctor of Business Administration Walden University August 2017
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Corporate Governance of Banks and Financial Institutions: Economic Theory, Supervisory Practice, Evidence and Policy
TL;DR: In this article, the authors propose to give creditors and even supervisors a special seat in the board of a bank and evaluate the suitability of such a board for the purpose of non-bank corporations.
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CEO incentive compensation in U.S. financial institutions
Gloria Y. Tian,Fan Yang +1 more
TL;DR: In this paper, the authors empirically address the questions of whether and if yes, how U.S. bankers are compensated in particular with regard to incentive pay and find that bank CEO incentive pay beyond the justifiable portion is positively associated with CEO power measures.
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Corporate control and governance in banking
TL;DR: In this article, the authors survey the state of the corporate governance literature with an emphasis on reviewing the agency problems unique to the banking industry and present a set of problems specific to the industry.
References
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Book
The Modern Corporation and Private Property
TL;DR: Weidenbaum and Jensen as mentioned in this paper reviewed the impact of developments not fully anticipated by Berle and Means, such as the rise of the service sector, and the significant role played by institutional investors in the owner/manager equation.
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Bank Runs, Deposit Insurance, and Liquidity
TL;DR: The authors showed that bank deposit contracts can provide allocations superior to those of exchange markets, offering an explanation of how banks subject to runs can attract deposits, and showed that there are circumstances when government provision of deposit insurance can produce superior contracts.
Journal ArticleDOI
Agency Problems and the Theory of the Firm
TL;DR: In this article, the authors explain how the separation of security ownership and control, typical of large corporations, can be an efficient form of economic organization, and set aside the presumption that a corporation has owners in any meaningful sense.
Book
A Monetary History of the United States
Milton Friedman,Anna J. Schwartz +1 more
TL;DR: The long-awaited monetary history of the United States by Friedman and Schwartz is in every sense of the term a monumental scholarly achievement as discussed by the authors, and the treatment of innumerable issues, large and small, have been brought to bear on the solution of complex and subtle economic issues.
Journal Article
Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure
TL;DR: In this paper, the authors integrate elements from the theory of agency, property rights and finance to develop a theory of the ownership structure of the firm and define the concept of agency costs, show its relationship to the separation and control issue, investigate the nature of the agency costs generated by the existence of debt and outside equity, demonstrate who bears costs and why and investigate the Pareto optimality of their existence.