Author : Rebel A. Cole
Release : 2008
Genre :
Kind : eBook
Book Rating : /5 ( reviews)
GET EBOOK
Book Synopsis Deregulation Gone Awry by : Rebel A. Cole
Download or read book Deregulation Gone Awry written by Rebel A. Cole. This book was released on 2008. Available in PDF, EPUB and Kindle. Book excerpt: This article tests several hypotheses concerning the failure of thrift institutions and the costs these failures imposed upon the thrift deposit insurance fund. The central hypothesis posits that thrift failures during the 1986-1989 period were largely a function of portfolio decisions made by thrift managers during the mid-1980s, which, in turn, were strongly influenced by the structural characteristics of these thrifts in the early 1980s. A sample of 1,654 healthy thrifts and 621 failed or soon-to-fail thrifts for which consistent official estimates of the cost of liquidation were available from the FSLIC is analyzed using a variation of the technique suggested by Heckman (1979) to correct for sample-selectivity bias. The results provide strong support for the central hypothesis, demonstrating that these portfolio choices and structural characteristics are strong determinants of the likelihood and cost of failure, and that the structural characteristics strongly influence the subsequent portfolio choices.