This paper studies a banking industry subject to common and idiosyncratic shocks. We compare two types of regulatory closure rules: (1) an “absolute closure rule,” which closes banks when their asset–liability ratios fall below a given threshold, and (2) a “relative closure rule,”...

An empirical study using an early-warning bank failure prediction model and call-report data to predict deterioration in a bank's condition.

A review of the current literature on deposit-institution failures, emphasizing the various methods used to model the determinants of insolvent and failed institutions.

Conventional wisdom on bank diversification confuses risk with failure. This article clarifies the distinction and shows how increasing bank size may increase bank risk, even though it lessens the probability of failure and lowers the expected loss. The key result is an application of...

Under depositor-preference laws, depositors' claims on the assets of failed depository institutions are senior to unsecured general-creditor claims. As a result, depositor preference changes the capital structure of banks and thrifts, thereby affecting the cost of capital for depositories....

An analysis of U.S. bank failures between 1984 and 1989 that uses a single-equation logit model to discriminate between samples of failed and nonfailed banks for each year in that period.

An explanation of how a Cox proportional hazards model can be used to identify both failed and healthy banks with a high degree of accuracy using a relatively small set of publicly available data.