AbstractsBusiness Management & Administration

Using Organouranium Compounds to Explore Fundamental Chemistry of Nuclear Fuel and Waste Systems

by Brian Sejoon Yang




Institution: University of California – Irvine
Department:
Year: 2016
Keywords: Finance; Banking; Banking; Deposit Insurance; Depositor Discipline
Posted: 02/05/2017
Record ID: 2066286
Full text PDF: http://www.escholarship.org/uc/item/5v66t7z8


Abstract

In this dissertation we investigate the effect of monetary policy and regulatory changes on asset pricing and investor behavior. In the first chapter, using unique data on over-the-counter bank stock prices and balance sheet information from 1940 to 1968, we find that the largest commercial bank stocks, ranked by market value or gross deposits, have significant lower risk-adjusted annual returns than do small sized bank stocks even after controlling for standard risk factors including size. This return difference can be attributed to the Banking Act of 1935. Failures of larger institutions tended to be resolved by purchase and assumption, which is preferred because it preserves the value of the going concern, while failures of smaller institutions tended to be resolved by payoff and liquidation. This policy is interpreted as an implicit bailout by the government for large banks and we find it is one of the first instances of preferential treatment for large banks. When examined during the period of 1926 to 1939, when there are no such guarantees, we do not find any significant risk-adjusted returns differences between banks of different sizes. In the second chapter we examine the relationship between deposit insurance and its effect on depositor behavior. Using two classes of depositors we ask how introduction of deposit insurance influenced depositor behavior using treatment-and-control estimation strategy. New York’s commercial banks accepted two classes of deposits, preferred and regular deposits. If a bank failed, preferred depositors received complete repayment before regular depositors received any repayment. The preferred depositors would serve as the control group because they would be minimally affected by deposit insurance. Before deposit insurance, regular depositors reacted to news about banks’ balance sheets much more than preferred depositors did. After deposit insurance, the behavior difference between regular and preferred depositors was reduced. This difference in differences indicates that deposit insurance reduced depositor monitoring.