CalFed Bancorp is one of 126 Samp;Ls suing the U.S. government for breach of contract related to supervisory goodwill, a form of goodwill created by the acquisition of insolvent thrifts during the early 1980s. Before a determination of damages in its lawsuit, CalFed announced and issued a...

The role of economic capital has grown significantly in recent years. Although not a regulatory requirement, an increasing number of financial institutions use economic capital for such purposes as measuring and managing the performance of people, products, risk exposures, and to manage and...

This paper reports the results of an empirical analysis of operational risk in a bank and derives a model to represent the distribution of losses. Comparisons are made with models traditionally used to model operational risk. The paper concentrates more on the severity issue rather than the...

We extend our prior work on how both supply (including the emergence of OTC equity derivatives and growth in share lending) and demand (including the growth of hedge funds) factors now facilitate the large-scale, low-cost decoupling of shareholder voting rights from shareholder economic...

Capital-assets ratio (CAR) of banks is uniquely determined by the ROA/ROE ratio. This is validated from a study of US banks for the period, 1935-2004. ROE was negatively related to CAR before introduction of capital regulation in US banks but the relationship has turned positive during...

Although the modern theory of financial intermediation portrays liquidity creation as an essential role of banks, comprehensive measures of bank liquidity creation do not exist. We construct four measures and apply them to data on virtually all U.S. banks from 1993-2003. We find that bank...

Restrictions on the ownership structure of a public company may harm the company's performance by preventing owners from choosing the best structure. We examine the stock-price performance and ownership structure, before and after the expiration of anti-takeover regulations, of a sample of...

Agency theory suggests that many of the costs incurred by the taxpayer during the 1980s thrift crisis were the result of conflicts between principals and their agents. This study models thrift failure costs as a function of three distinct types of agency conflicts: conflicts between creditors...

In this paper, we test the hypothesis that granting employee stock options motivates CEOs of banking firms to undertake riskier projects. We also investigate whether granting employee stock options reduces the bank's incentive to borrow while inducing a buildup of regulatory capital. Using a...

This paper examines the relationship between the amount of information disclosed by bank holding companies (BHCs) and their subsequent risk profile and performance. Using data from the annual reports of BHCs with large trading operations, we construct an index of publicly disclosed information...