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To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.jbankfin.2007.11.009 Byline: Timothy J. Curry (a)(b), Gary S. Fissel (a), Gerald A. Hanweck (b) Keywords: Bank holding company risk ratings; Cyclical bias in bank ratings; Secular trend in bank risk ratings Abstract: This paper examines whether bank holding company (BHC) risk ratings are asymmetrically assigned or biased over business cycles from 1986 to 2003. In a model of ratings determination which accounts for bank characteristics, financial market conditions, past supervisory information, and aggregate macro-economic factors, we find that bank exam ratings exhibit inter-temporal characteristics. First, exam ratings exhibit some evidence of examiner bias for several periods analyzed. When the business cycle turns, examiners sometime depart from standards that they set during the previous phases of the cycle. However, this bias is not widespread or systematic. Second, exam ratings exhibit some inertia. Our results suggest that examiners rate on the side of not changing (rather than upgrading or downgrading) an institution's exam rating. Third, we find robust evidence of a secular trend towards more stringent examination BHC ratings standards over time. Author Affiliation: (a) Division of Insurance and Research, Federal Deposit Insurance Corporation (FDIC), 550 17th st. NW, Washington, DC 20434, United States (b) School of Management, George Mason University, Fairfax, VA, United States Article History: Received 1 March 2007; Accepted 2 November 2007 Article Note: (footnote) [star] The views expressed are those of the authors and do not necessarily reflect the views of the FDIC or its staff., [star][star] This paper was reviewed and accepted while Prof. Giorgio Szego was the Managing Editor of The Journal of Banking and Finance and by the past editorial board.

To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.jbankfin.2005.05.013 Byline: Gary S. Fissel (a), Lawrence Goldberg (b), Gerald A. Hanweck (c)(d) Keywords: Emerging market crises; Bank value; Debt information Abstract: This study estimates a model of banking company equity returns taking into consideration book value and market value measures of their exposure to emerging markets debt. In this estimation, general systematic market factors, such as the rate of return on the S&P500 stock index and yields on a constant maturity 5-year Treasury note, are held constant such that the exposure variables are accounting for effects due to banks' exposure to emerging market debt. The results, although not uniform among banking companies, support the hypothesis that the extent of exposure to emerging market debt are factored into the valuation of banking company equity contemporaneously. The inclusion of a market value indicator adds to the explanation of equity returns of some banks. It is also clear that knowing the extent of the exposure on a book value basis is important information alone that may allow investors to take account of or evaluate the effects of changes in banking company equity valuation from LDC debt exposures. We also perform an event study for three major debt crises to determine whether the market recognizes the effects of these events on bank valuation. The event study results show that there is little information from identifying the time period of the crises on banking company equity returns. Explanations for this are that the information of these possible crises has been embedded in bank changes in exposure and that the market valuation of the emerging market debt is already accounted for by our model. Author Affiliation: (a) Division of Insurance and Research, Federal Deposit Insurance Corporation, Washington (DC), USA (b) Department of Finance, University of Miami, Coral Gables, FL 33124, USA (c) School of Management, George Mason University, 4400 University Drive, Fairfax, VA 22030, USA (d) Visiting Scholar, Division of Insurance and Research, FDIC, Washington (DC), USA Article History: Received 18 November 2003; Accepted 3 January 2005

The authors argue that federal bank merger policy is having the effect of reducing competition. This is because current policy was formulated in a time before banks saw size as a protection against failure. The authors recommend several reforms to protect competition in the banking industry.

Banking regulators have proposed the incorporation of interest rate risk in risk-based capital standards. The proposed changes are intended to limit the impact of interest rate volatility and its effects on the value of bank equity on the federal deposit insurance fund. Although additions to capital can provide the fund with some degree of insulation from interest rate volatility, they do not really limit banks' rate exposure.

The effect of liberalized interstate banking regulations on bank stock prices was investigated using a parameter event study technique. The results showed that the main beneficiaries of interstate banking law changes were out-of-state and out-of-region banks. On the other hand, money center banks have not benefitted much from these changes since they opened interstate banking opportunities to others.

I. Introduction Bank deregulation of the last two decades has been a victory over centuries-old governmental restraints aimed at protecting banks from competition in order to limit their exposure to [...]

I. Introduction The bank mergers of the last decade in the United States and globally, in particular, large bank mergers, have already produced radical change in banking structure, and more [...]