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The ongoing consolidation in the banking sector may pose enormous policy problems, particularly with the issuance of loans to small business enterprises. Statistics revealed that de novo banks are capable of providing more loans, in terms of total assets, to small business enterprises compared to other financial institutions of the same size. Between 1987 to 1994, seasoned de novo banks generated loans up to 573 and 702 basis points higher than conventional banks.

A model of the mean reversion of exchange rates, based on short-run and long-run exchange data in countries including Japan, Germany, the UK, Italy, France, and Canada, is applied to a purchasing power parity exchange rate. Results confirm earlier conclusions in ascertaining that no cases of mean reversion exist in the short term. It may be concluded that mean reversion is not necessarily linear and that differences in the purchasing power parity rate do not guarantee identical changes in the spot rate.

The concept of market structure was evaluated in connection to its possible relation to the performance of the largest European banks in 11 European countries banks during 1988-1991. Stochastic cost frontier techniques were used to determine measures of X-inefficiency and scale-inefficiency on the assumption that distributed error terms are half normal. Results indicate that there were no positive or important links between market structure and performance in the banks studied over the four-year period.

I. INTRODUCTION The current account for individual countries varies for many reasons and has important economic consequences that make it of major concern to policy makers throughout the world. These [...]

The separation of ownership from control in large corporations can cause agency problems. This study analyzes the effects of the dispersion of corporate ownership on the compensation of the top executives of Fortune 500 companies. The effects are estimated across the executive hierarchy and for different components of the compensation package in contrast to more limited previous studies. The results indicate that there is a significant agency effect on executive pay, though the magnitude is small relative to company size. The effects are greatest for the most liquid form of remuneration, salaries, and are nonuniform across executive categories, with the strongest effect found for the Chairman of the Board., The impact of corporate ownership dispersion on executive compensation is examined. Data on distribution of stock ownership and on executive pay in Fortune 500 companies are used for the study. Unlike previous studies, this one investigates the effects of dispersion across the executive hierarchy and for various elements of the compensation package. Results reveal the existence of significant agency effect on executive pay, although its extent is small when compared to company size. Effects are found to be strongest for the most liquid form of renumeration and salaries. Effects are also demonstrated to be nonuniform across executive categories, with the strongest impact on the Chairman of the Board position. Implications are discussed.

The antitrust dispute between Ocean State Physicians Health Plan Inc. (Ocean State) and Blue Cross and Blue Shield of Rhode Island (Blue Cross) indicates the strong competition in the health care industry. Although a jury verdict found Blue Cross guilty, the District Court overturned the verdict which was upheld by the Court of Appeals. The higher courts ruled that Blue Cross' use of the most-favored-nation clause, creation of a preferred provider organization similar to Ocean State and its adverse selection policy were legitimate.

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.

Empirical evidence indicates that lending to small businesses is negatively correlated with the age and size of banks. This observation can be gleaned from a sample of banks with less than $500 million in assets for the period 1993-1996 and which were 25 years or younger at the time. In addition, small business lending is positively correlated with higher concentration rates in urban areas but negatively correlated with higher concentration in rural areas. These empirical findings suggest that bank consolidation has significant effects on small business lending.