Bank moral hazard and the introduction of official deposit insurance in Canada

International Review of Economics and Finance

Volumn 12, Issue 2, 2003, Pages 247-273

  Gueyie, Jean Pierre ^a   Lai, Van Son ^b  

^a UNIVERSITÉ DU QUÉBEC À MONTRÉAL   (Canada)

^b UNIVERSITÉ LAVAL   (Canada)

Author keywords

Bank regulation; Capital; Deposit insurance; Moral hazard; Risk taking

Indexed keywords

EID: 0037272349     PISSN: 10590560     EISSN: None     Source Type: Journal    
DOI: 10.1016/S1059-0560(02)00106-5     Document Type: Article

References (55)

1. Avery R.B. Berger A.N. Loan commitments and bank risk exposure Journal of Banking and Finance 15 1991 173-192
2. Barth J.R. Bartholomew P.F. Labich C. Moral hazard and the thrift crisis: an analysis of 1988 resolutions Proceedings of a Conference on Bank Structure and Competition, Federal Reserve Bank of Chicago, Chicago, Illinois 1989 344-384
3. Barth J.R. Page D.E. Brumbaugh R.D.J. Pitfalls in using market prices to assess the financial condition of depository institutions Journal of Real Estate Finance and Economics 5 1992 151-166
4. Benston G. Hunter W.C. Wall L.D. Motivations for banks mergers and acquisitions: enhancing the deposit insurance put option versus earnings diversification Journal of Money, Credit and Banking 27 3 1995 777-788
5. Berger A. The relationship between capital and earnings in banking Journal of Money, Credit and Banking 27 2 1995 432-456
6. Berger A.N. Herring R.J. Szegö G.P. The role of capital in financial institutions Journal of Banking and Finance 19 1995 393-430
7. Biswas R. Fraser D.R. Hebb G. On the shareholder wealth effects of deposit insurance premium revisions on large, publicly traded commercial banks Journal of Financial Research 23 2 2000 223-241
8. Black F. Scholes M. The pricing of options and corporate liabilities Journal of Political Economy 81 1973 637-659
9. Blum J. Do capital adequacy requirements reduce risks in banking? Journal of Banking and Finance 23 1999 755-771
10. Bordo M.D. Redish A. Rockoff H. A comparison of the United States and Canadian banking systems in the twentieth century: stability versus efficiency? Bordo M.D. Sylla R. (Eds.), Anglo-American financial systems: Institutions and markets in the twentieth century 1995 11-40 Irwin New York
11. Boyd J.H. Graham S.L. Hewitt R.S. Bank holding company mergers with nonbank financial firms: effects on the risk of failure Journal of Banking and Finance 17 1993 43-63
12. Brewer E.III Relationship between bank holding company risk and nonbank activity Journal of Economics and Business 41 1989 337-353
13. Brewer E.III Mondschean T.S. Strahan P.E. The role of monitoring in reducing the moral hazard problem associated with government guarantees: evidence from the life insurance industry Journal of Risk and Insurance 64 2 1997 301-322
14. Calem P. Rob R. The impact of capital-based regulation on bank risk-taking Journal of Financial Intermediation 8 1999 317-352
15. Canadian Bankers Association (1967). CBA proposal. Toronto, Canada. pp. 2272-2273.
16. Carr J. Mathewson F. Quigley N. Stability in the absence of deposit insurance: the Canadian banking system, 1890-1966 Journal of Money, Credit and Banking 27 4 1995 1137-1158
17. Demsetz R.S. Saidenberg M.R. Strahan P.E. Banks with something to lose: the disciplinary role of franchise value FRBNY Economic Policy 1996 1-14
18. Duan J.-C. Moreau A.F. Sealey C.W. Fixed-rate deposit insurance and risk-shifting behavior at commercial banks Journal of Banking and Finance 16 1992 715-742
19. Ellis M.D. Flannery M.J. Does the debt market assess large bank's risk? Journal of Monetary Economics 30 1992 481-502
20. Ely D. Weaver R.R. The shifting value of federal deposit insurance: implications for reform Journal of Financial Services Research 5 1991 111-130
21. Flannery M.J. Sorescu S.M. Evidence of bank market discipline in subordinated debenture yields Journal of Finance 51 1996 1347-1377
22. Gallo J.G. Apilado V.P. Kolari J.W. Commercial bank mutual fund activities: implications for bank risk and profitability Journal of Banking and Finance 20 1996 1775-1791
23. Galloway T.M. Lee W.B. Roden D.M. Banks' changing incentives and opportunities for risk-taking Journal of Banking and Finance 21 1997 509-527
24. Giammarino R. Schwartz E. Zechner J. Market valuation of banks assets and deposit insurance in Canada Canadian Journal of Economics 22 1 1989 109-127
25. Giliberto M. Interest-rate sensitivity in the common stocks of financial intermediaries: a methodological note Journal of Financial and Quantitative Analysis 20 1985 585-595
26. Goldberg L.C. Saunders A. The causes of US banks expansion overseas: the case of Great Britain Journal of Money, Credit and Banking 12 4 1980 630-643
27. Government of Canada. Canada Gazette. Various issues. Monthly publications, 1975-1982.
28. Gropper D.M. Osward S. Regulation, deregulation and managerial behavior: new evidence on expense preference in banking Applied Financial Economics 6 1996 1-7
29. Hassan M.K. The market's perception of the riskiness of large US banks commercial letters of credit Journal of Financial Services Research 6 1992 207-221
30. Hassan M.K. Karels G.V. Peterson M.O. Deposit insurance, market discipline and off-balance sheet banking risk of large US commercial banks Journal of Banking and Finance 18 1994 575-593
31. Hovakimian A. Kane E.J. Effectiveness of capital regulation at US commercial banks, 1985 to 1994 Journal of Finance 55 1 2000 451-468
32. Kane E.J. Unal H. Change in market assessment of deposit-institution riskiness Journal of Financial Services Research 1 1988 207-229
33. Karels G.V. McClatchey C.A. Deposit insurance and risk-taking behavior in the credit union industry Journal of Banking and Finance 23 1999 105-134
34. Keeley M.C. Deposit insurance, risk, and market power in banking American Economic Review 80 5 1990 1183-1200
35. Keeley M.C. Furlong F.T. A reexamination of mean-variance analysis of bank capital regulation Journal of Banking and Finance 14 1990 69-84
36. Kim D. Santomero A. Risk in banking and capital regulation Journal of Finance 43 5 1988 1219-1233
37. Kryzanowski L. Roberts G.S. Canadian banking solvency, 1922-1940 Journal of Money, Credit and Banking 25 3 1993 361-376
38. Kryzanowski L. Roberts G.S. Perspectives on Canadian bank insolvency during the 1930s: a note comment by Lawrence Kryzanowski and Gordon S. Roberts Journal of Money, Credit and Banking 31 1 1999 130-136
39. Lee S.J. Mayers D. Smith C.W. Guaranty funds and risk-taking: evidence from the insurance industry Journal of Financial Economics 44 1997 3-24
40. Madura J. Zarruk E.R. Bank exposure to interest-rate risk: a global perspective Journal of Financial Research XVIII 1 1995 1-13
41. Marcus A.J. Deregulation and bank financial policy Journal of Banking and Finance 8 1984 557-565
42. Merton R.C. Analytical derivation of the cost of deposit insurance and loan guarantees: an application of modern option pricing theory Journal of Banking and Finance 1 1977 3-11
43. Newey W.K. West K.D. A simple, positive semi-definite, heteroscedasticity and autocorrelation consistent covariance matrix Econometrica 55 1987 703-708
44. Pesando, J. E. (1985). Deposit insurance and the incentive for excessive risk-taking: alternative strategies for reform (Discussion Paper Series). Ontario Economic Council.
45. Ronn E.I. Verma A.K. Pricing risk-adjusted deposit insurance: an option-based model Journal of Finance XLI 4 1986 871-895
46. Santomero A.M. Chung E.J. Evidence in support of broader bank power Financial Markets, Institutions and Instruments 1 1 1992
47. Saunders A. Strock E. Travlos N.G. Ownership structure, deregulation and bank risk-taking Journal of Finance 45 2 1990 643-654
48. Saunders A. Wilson B. If history could be rerun: the provision and pricing of deposit insurance in 1933 Journal of Financial Intermediation 4 1995 396-413
49. Saunders, A., & Wilson, B. (1997). Bank capital and bank structure: a comparative analysis of the US, UK and Canada (Working paper). New York: New York University, Department of Finance.
50. Saunders A. Wilson B. The impact of consolidation and safety-net support on Canadian, US and UK banks: 1893-1992 Journal of Banking and Finance 23 1999 537-571
51. Shaffer S. A test of competition in Canadian banking Journal of Money, Credit and Banking 25 1 1993 49-61
52. Shrieves R.E. Dahl D. The relationship between risk and capital in commercial banks Journal of Banking and Finance 16 1992 439-457
53. Wall D.L. Peterson D.R. The effect of capital adequacy guidelines on large bank holding companies Journal of Banking and Finance 11 1987 581-600
54. Wetmore J.L. Brick J.R. Commercial bank risk: market, interest rate, and foreign exchange Journal of Financial Research XVII 4 1994 585-596
55. White H. A heteroskedasticity-consistent covariance matrix estimator and a direct test for heteroskedasticity Econometrica 48 1980 817-838