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This study shows that monetary incentives together with performance disclosures lead to significant increases in effort and productivity in the multi-branch banking industry. Our results are based on an incentivized credit card campaign run by a commercial bank in which employees were paid a piece-rate if they sold a credit card to a customer. Later in the campaign, the head office started to provide daily performance reports for all branches of the bank. The campaign ultimately resulted in a significant 12.5% increase in the average daily productivity of branch staff and productivity changes found were heterogeneous across different branches.

Cole and White (J Financ Serv Res 2012) show that small banks which failed during the financial crisis–like small banks which faile in previous crises–tended to have high concentration of loans financing commercial real estate and real estate development several years before failure. In contrast, large banks failed during the financial crisis due to the novel strategy of investing in poorly underwritten subprime mortgages. The fact that large banks fail as a resut of changing business models while small banks fail for predictable reasons makes justifies a heightened level of supervision of large banks (consistent with the Dodd-Frank Act).

This special issue of the Journal of Financial Services Research includes a selection of papers originally presented at the Tenth Annual FDIC-JFSR Fall Banking Research Conference in October 2010. The papers in this special issue were invited by the editors of the JFSR but were subjected to the regular JFSR referee process. We also invited the conference paper discussants to draft their comments for publication in this special issue. In the first article of this special issue, “Deja Vu All Over Again: The Causes of U.S. Commercial Bank Failures This Time Around,” Cole and White (2012) use a logistic regression framework to identify factors associated with more than 300 bank failures since 2009. This paper was presented in the “Reflections of the Financial Crisis” session of the Conference. The authors find that many failing banks tended to have loan exposures to real estate construction and development, commercial real estate and multifamily residential mortgages. Unlike many of the largest banks that were negatively impacted by their exposures to wholesale subprime mortgage securitization activities, residential mortgage exposures in smaller community banks tended to reduce the probability that these banks failed. The discussant for the session was Pete Kyle and his discussion underscores the importance of capital especially for small banks. Kyle (2012) also differentiates short-term and long-term effects of capital where capital is more important in the short-term but volatility of asset returns dominates in the long term. For large banks the prescription is heightened supervision, which should be geared toward understanding new risky business lines, especially those that may pose systemic risk. Three of the papers in this special issue, presented in the “Measuring Systemic Risk” session of the program, focus on the measurement of systemic risk. Robert DeYoung provides a unified discussion of systemic risk and the contributions made by each of these papers. As DeYoung (2012) points out, the profession has yet to decide on a single focused J Financ Serv Res (2012) 42:1–3 DOI 10.1007/s10693-012-0143-1

This article investigates how President Clinton's program for increasing credit availability to small and medium-sized businesses affected bank stocks. The pattern of results observed is consistent with the hypothesis that the program promised to redistribute wealth through the federal safety net and not just to eliminate burdensome regulations.

This article develops and tests a random coefficient two-index model for commercial bank stock returns which controls for the time-varying interest rate sensitivity caused by a bank's changing maturity profile. Using a sample of 51 actively traded commercial banks, the seemingly unrelated regression results provide evidence that commercial bank stock returns are significantly interest rate sensitive. The effect of interest rate changes on bank stock returns is found to be positively related to the maturity mismatch between the bank's assets and liabilities, when the proxy for interest rate changes and the proxy for maturity mismatch are compatible to each other.

This article has two purposes. One is to develop and test hypotheses regarding the factors that influence campaign contributions from the political action committees (PACs) of large commercial banks to members of the House and Senate banking committees. A second purpose is to estimate the effect of these contributions on subsequent legislator behavior. Aside from being the first to study the causes and effects of big bank PAC contributions, this article is novel in its employment of bill sponsorship as a measure of legislator behavior.

Because of prior data limitations, the interdependence between banks and thrifts in their rate-setting activities have never been empirically examined. These relationships are important in order to understand the structure of deposit markets and to evaluate the competitive effects of deregulation. This study applies vector autoregressive modeling techniques to analyze six-month retail CD rate data for large banks and thrifts in six major cities during 1983 through 1985. A structure of rate-setting behavior is observed that is consistent with oligopolistic markets where banks, as stronger institutions, dominate the price-setting decisions of thrifts.