Cole, Rebel A. and White, Lawrence J. (2010): Déjà vu all over again: The causes of U.S. commercial bank failures this time around.
Download (216kB) | Preview
In this study, we analyze why U.S. commercial banks failed during the recent financial crisis. We find that proxies for commercial real estate investments, as well as traditional proxies for the CAMELS components, do an excellent job in explaining the failures of banks that were closed during 2009, just as they did in the previous banking crisis of 1985 – 1992. Surprisingly, we do not find that residential mortgage-backed securities played a significant role in determining which banks failed and which banks survived.
|Item Type:||MPRA Paper|
|Original Title:||Déjà vu all over again: The causes of U.S. commercial bank failures this time around|
|Keywords:||bank; bank failure; CAMELS; commercial real estate; construction; FDIC; financial crisis; mortgage-backed security; residential mortgage; residential real estate|
|Subjects:||G - Financial Economics > G1 - General Financial Markets > G18 - Government Policy and Regulation
G - Financial Economics > G2 - Financial Institutions and Services > G28 - Government Policy and Regulation
G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks ; Depository Institutions ; Micro Finance Institutions ; Mortgages
|Depositing User:||Prof. Rebel Cole|
|Date Deposited:||02. Sep 2010 12:46|
|Last Modified:||17. Feb 2013 01:57|
Acharya, Viral, and Matthew Richardson, eds. 2009. Restoring Financial Stability: How to Repair a Failed System. New York: Wiley.
Brunnermeier, Markus K. 2009. Deciphering the liquidity and credit crunch 2007–2008. Journal of Economic Perspectives 23, 77–100.
Cole, Rebel A., Barbara G. Cornyn and Jeffery W. Gunther. 1995. FIMS: A new monitoring system for banking organizations. Federal Reserve Bulletin 81, January. Board of Governors of the Federal Reserve System, Washington, DC. 1-15.
Cole, Rebel A. and Jeffery W. Gunther. 1998. Predicting bank failures: A comparison of on- and off-site monitoring systems. Journal of Financial Services Research 13, 103-117.
Cole, Rebel A. and Jeffery W. Gunther. 1995. Separating the likelihood and timing of bank failure. Journal of Banking and Finance 19, 1073-1089.
Cole, Rebel A. and George W. Fenn. 2008. The role of commercial real estate investments in the banking crisis of 1985-92. Paper presented at the Annual Meetings of the American Real Estate and Urban Economics Association held in January 1995 in Washington, DC, USA Available at http://ssrn.com/abstract=1293473.
Cole, Rebel A., Joseph A. McKenzie and Lawrence J. White. 1995. Deregulation gone awry: Moral hazard in the savings and loan industry. In Bank Failures: Causes, Consequences and Cures, edited by Michael S. Lawler and John H. Wood, Kluwer Academic Publishers: Norwell, MA. Available at http://ssrn.com/abstract=1293468.
Coval, Joshua, Jakub Jurek, and Erik Stafford. 2009. The economics of structured finance. Journal of Economic Perspectives 23, 3–25.
Demyanyk, Yuliya S. and Otto Van Hemert. 2010. Understanding the subprime mortgage crisis. Review of Financial Studies, forthcoming
Demyanyk, Yuliya and Iftekhar Hasan. 2009. Financial crises and bank failures: A review of prediction methods. Federal Reserve Bank of Cleveland, Working Paper 09-04R. Available at: http://www.clevelandfed.org/research/workpaper/2009/wp0904r.pdf?WT.oss=Comments%20on%20Measuring%20and%20Analyzing%20Cross-country%20Differences%20in%20Firm%20Dynamics&WT.oss_r=178
Forsyth, Grant D. 2010. Trough to peak: A note on risk-taking in the Pacific Northwest’s banking sector, 2001 to 2007. Working paper, Eastern Washington University.
Gorton, Gary B. 2008. The Panic of 2007. NBER Working Paper 14358. Available at http://www.nber.org/papers/w14358.
Krishnamurthy, Arvind. 2010. How debt markets have malfunctioned in the crisis. Journal of Economic Perspectives 24, 3-28.
Maddala, G. S. 1983. Limited-Dependent and Qualitative Variables in Economics. New York: Cambridge University Press.
Mayer, Christopher, Karen Pence, and Shane M. Sherlund. 2009. The Rise in Mortgage Defaults. Journal of Economic Perspectives 23, 27–50.
Torna, Gorkan. 2010. Understanding Commercial Bank Failures in the Modern Banking Era. Available at: http://www.fma.org/NY/Papers/ModernBanking-GTORNA.pdf
Available Versions of this Item
- Déjà vu all over again: The causes of U.S. commercial bank failures this time around. (deposited 02. Sep 2010 12:46) [Currently Displayed]