The financial sector incurred big losses during the recent financial collapse and recession. The losses occurred despite regulatory requirements imposed upon the financial services industry meant to ensure confidence and stability. This study analyzes the profitability and stock returns of...

The causes of the financial crisis of 2007-09 are many and varied. Indeed, the crisis may be viewed as the product of a perfect storm. This paper identifies the major culprits or sinners of the U.S. crisis and enumerates their more important sins. The culprits include central bankers, commercial...

In addition to their direct effects, episodes of financial instability may decrease investor confidence. Measuring the impact of a crisis on investor confidence is complicated by the fact that it is difficult to disentangle the effects on investor confidence from coincident direct effects of the...

The ability to predict bank failure has become much more important since the mortgage foreclosure crisis began in 2007. The model proposed in this study uses proxies for the regulatory standards embodied in the so-called CAMELS rating system, as well as several local or national economic...

Traditionally, individual states have shared responsibility for regulating the US insurance industry. The Dodd-Frank Act changes this by tasking the Federal Reserve with regulating the systemic risks that particularly large insurance organizations might pose and assigning the regulation of...

Following the onset of the August 2007 subprime mortgage crisis, bank regulators suggest that the old definition of bank may be too narrow – that banking has partially escaped their purview. Perhaps, but this may be partly the regulators’ own doing. We develop this proposition through...

This paper aims to test the extent to which the tax regulatory and market discipline hypotheses determine derivative activities of U.S. commercial banks for the period starting 1992 through 2008. We employ Mansfield’s (1961) logistic diffusion model and we consider derivative activities as...

The Federal tax code creates challenges for comparing the profit rates of different banks on a consistent basis. The earnings of banks that elect to operate under Subchapter S of the Federal tax code are not subject to the Federal corporate income tax, but S-bank shareholders are taxed on their...

This paper investigates the impact of the Gramm-Leach-Bliley Act (GLBA) on the insurance industries of developed countries. We find that the insurance industries of most of the developed countries in our sample have significant negative spillover effects from the GLBA. Further, we find that the...

Officials must show that they understand why and how the public's confidence in the federal government's ability to manage financial turmoil was lost. Leaders of the Treasury, Federal Reserve, and the U.S. Securities and Exchange Commission must face up to their institutions' roles in an...