It has been argued that underpriced federal deposit insurance provides incentive for insured institutions to increase the value of shareholder equity by expanding into activities that shift risk onto the deposit insurer. Derivative instruments have been used by firms to change their risk...

This article examines thrift financial data from 1985 to 1991 and finds that financially distressed thrifts, especially those benefiting from regulatory forbearance policies, tended to borrow more from Federal Home Loan Banks. The authors also find that the stock returns of distressed thrifts...

This paper examines the relationship between asset risk and franchise values and between asset risk and ownership structure. Stock price data from publicly traded S&L is used to measure portfolio risk and franchise or charter values. The empirical results provide support for the moral hazard...