Purpose – The purpose of this paper is to provide the first empirical study of external economies (agglomeration economies) in the banking industry. Design/methodology/approach – The author extends a standard specification of banking costs to control for community and market characteristics....

Economic theory predicts that reciprocal brokered deposits, by enhancing deposit insurance coverage, may reduce market discipline for banks, permitting them to take more risk in various dimensions. A newly available dataset provides empirical evidence related to that hypothesis.

Motivated by the debate over similarities between the current and previous financial crises, logit estimates reveal significantly changed linkages between observable financial ratios and probabilities of subsequent bank failure using US data from the 1980s and 2008.

Several theories of externalities and asymmetric information suggest a positive role for government programs to assist credit markets, though potential distortions by special interests carry attendant dangers. We examine the empirical association between funding by several federal government...

A structural discounted cash flow (DCF) model shows that the underlying sources of earnings growth generate very different growth paths and equity values than assumed in traditional DCF calculations. Moreover, the structural DCF model can assess the impact of exogenous factors on valuation,...

Using nationwide U.S. bank-level data from 2003-2007, this paper explores multiple dimensions of the financial performance of small business loans by means of statistical decompositions. I find systematic contrasts across small commercial loans of different sizes, which suggest dynamic changes...

Economic theory predicts that reciprocal brokered deposits, by facilitating an extension of deposit insurance coverage, may exacerbate moral hazard and reduce market discipline for banks, permitting them to take more risk in various dimensions. Using a newly available dataset, this note explores...

The Panzar-Rosse model has been widely applied to assess competitive conduct, often in specifications controlling for firm scale or using a price equation. We show that neither a price equation nor a scaled revenue function yields a valid measure for competitive conduct. Moreover, even an...

Using data from metropolitan U.S. labor market areas, we quantify empirical associations between entry by small firms and a vector of economic performance measures encompassing levels, volatilities, and growth rates of several income and employment variables. Distinct and robust associations are...

Structure-pricing linkages are estimated for single-market banks, to measure structure and pricing more accurately. Loan loss ratios are controlled for predicted to be important by information-theoretic models of lending. A strong structure-pricing linkage is found.