Search Results
Working Paper
Equilibrium with Mutual Organizations in Adverse Selection Economies
An equilibrium concept in the Debreu (1954) theory-of-value tradition is developed for a class of adverse selection economies and applied to the Spence signaling and Rothschild-Stiglitz (1976) adverse selection environments. The equilibrium exists and is optimal. Further, all equilibria have the same individual type utility vector. The economies are large with a finite number of types that maximize expected utility on an underlying commodity space. An implication of the analysis is that the invisible hand works for this class of adverse selection economies.
Journal Article
Are banks dead? Or are the reports greatly exaggerated?
This article reexamines the conventional wisdom that commercial banking is in severe decline. A careful reading of the evidence does not support it. True, on-balance sheet assets held by commercial banks have declined as a share of total intermediary assets. But this measure ignores the substantial growth in banks' off-balance sheet activities, in off-shore lending by foreign banks, and in the size of the financial intermediation sector. Adjusted for these considerations, the bank-assets measure shows no clear evidence of secular decline. Neither does an alternative measure, constructed using ...
Journal Article
Are banks dead?
Working Paper
Inflation and financial market performance: what have we learned in the last ten years?
The last decade has witnessed a great deal of theoretical and empirical research on the relationships between inflation, financial market performance, and economic growth. This paper provides a survey of that literature and presents new cross-country empirical results on this topic. We find that inflation is negatively associated with banking industry size, real returns on financial assets, and bank profitability. We also discover a positive relationship between asset return volatility and inflation.
Working Paper
Inflation and financial market performance
An exploration of the cross-sectional relationship between inflation and an array of indicators of financial market conditions, using time-averaged data covering several decades and a large number of countries.
Journal Article
Inflation, financial markets and capital formation
Discussion Paper
Bank regulation and the efficiency of financial intermediation
Journal Article
Risk, regulation, and bank holding company expansion into nonbanking
When banking institutions can expand into other lines of business, some think they will diversify to reduce their total risk. Others think just the opposite. In this article, John H. Boyd and Stanley L. Graham explain the reasoning behind these two views and then test to see which one best describes the behavior of U.S. bank holding companies since 1970. They find that in 1971-77, when these companies were relatively free to invest in some new lines of business, diversification was associated with greater risk of failure. But in 1977-83, when the companies were more tightly regulated, that ...
Report
Ex-dividend price behavior of common stocks
This study examines common stock prices around ex-dividend dates. Such price data usually contain a mixture of observations?some with and some without arbitrageurs and/or dividend capturers active. Our theory predicts that such mixing will result in some nonlinear relation between percentage price drop and dividend yield?not the commonly assumed linear relation. This prediction and another important prediction of theory are supported empirically. In a variety of tests, marginal price drop is not significantly different from the dividend amount. Thus, over the last several decades, one-for-one ...