The Causes and Costs of Depository Institution Failures (Innovations in Financial Markets and Institutions, 9)

One of the major financial market events of the 1980s was the precipitous rise of depository institution failures including banks, savings and loan associations, and credit unions. Not since the 1930s has there been a similar period of turmoil in these industries. The events of the 1980s have inspired a renewed interest in the causes and cost of financial institution failure and several questions that had seldom been asked in the post-World War II economics literature have resurfaced Why do financial institutions fail? What are the costs of their failure? How do they differ from other firms and industries? What are the implications for financial market regulation? The Causes and Costs of Depository Institution Failures critically surveys and extends previous analyses of these questions. Audience: Scholars and researchers in the areas of money and banking, financial institutions, and financial markets, as well as regulators and policymakers. One of the major financial market events of the 1980s was the precipitous rise of depository institution failures including banks, savings and loan associations, and credit unions. Not since the 1930s has there been a similar period of turmoil in these industries. The events of the 1980s have inspired a renewed interest in the causes and cost of financial institution failure and several questions that had seldom been asked in the post-World War II economics literature have resurfaced * Why do financial institutions fail? * What are the costs of their failure? * How do they differ from other firms and industries? * What are the implications for financial market regulation? __The Causes and Costs of Depository Institution Failures__ critically surveys and extends previous analyses of these questions. __Audience:__ Scholars and researchers in the areas of money and banking, financial institutions, and financial markets, as well as regulators and policymakers. Front Matter....Pages i-vii Introduction....Pages 1-8 S&L Closures and Survivors: Are there Systematic Differences in Behavior?....Pages 9-27 Deregulation Gone Awry: Moral Hazard in the Savings and Loan Industry....Pages 29-73 Underlying Determinants of Closed-Bank Resolution Costs....Pages 75-92 Federal Reserve Lending to Banks that Failed: Implications for the Bank Insurance Fund....Pages 93-117 The Savings and Loan Debacle: Moral Hazard or Market Disaster?....Pages 119-161 What are the Connections between Deposit Insurance and Bank Failures?....Pages 163-198 Bank Failures as Poisson Variates: A Reappraisal....Pages 199-211 A Triggering Mechanism of Economywide Bank Runs....Pages 213-231 Herd Behavior or Animal Spirits: A Possible Explanation of Credit Crunches and Bubbles....Pages 233-245 Back Matter....Pages 247-250