September 2023
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5 Reads
Journal of Financial Intermediation
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Publications (112)
June 2021
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20 Reads
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15 Citations
Journal of Financial Intermediation
We develop a conceptual framework that links the compensation incentives of bank executives to the risk and return externalities generated by banks but borne by society. Using 1994 to 2006 data from large U.S. commercial banks, we find that CEO pay-performance incentives reduce both negative systemic risk externalities and positive liquidity creation externalities, while pay-risk incentives increase both externalities. Our findings offer support for Federal Reserve guidelines that encourage greater reliance on long-term equity-based compensation, and they infer a regulatory tradeoff: Bank executive pay rules aimed at reducing systemic risk will result in reduced system-wide liquidity creation as well.
January 2021
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9 Reads
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3 Citations
SSRN Electronic Journal
January 2021
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2 Reads
SSRN Electronic Journal
October 2020
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11 Reads
Journal of Money Credit and Banking
In February 2019, the Journal of Money, Credit and Banking (JMCB) turned 50. The editors of the journal decided to celebrate this anniversary with two conferences, reflecting the two broad areas that the journal covers. A first conference on “Financial intermediation, regulation and economic policy” was held at the European Central Bank in Frankfurt/Germany on March 28–29, 2019, and addressed topics in the credit and financial intermediation fields. A second conference addressed topics in the macro‐economic and monetary fields, and took place at the Federal Reserve Bank of New York on May 30–31, 2019. This Special Issue displays the best contributions to the first conference. The contributions to the second celebratory conference are published in a separate Special Issue.
August 2019
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41 Reads
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5 Citations
Journal of Financial Services Research
We test whether and to what extent listed U.S. commercial banks have been able to take advantage of their access to public capital markets to respond more efficiently to new growth opportunities. We examine over 100,000 quarterly observations of publicly traded and privately held U.S. commercial banking companies between 1984 and 2012. Identification is gained via instrumental variables estimation and by exploiting the natural exogeneity of growth opportunities in the commercial banking industry. We find that publicly traded banks are substantially more responsive to new growth opportunities than private banks, and that this superior investment responsiveness exists in both the organic and external (M&A) growth channels.
January 2019
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40 Reads
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16 Citations
SSRN Electronic Journal
January 2019
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67 Reads
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33 Citations
The Journal of Entrepreneurial Finance
We test whether rural versus urban location, and the amount of social capital present in those locations, influence the performance of Small Business Administration (SBA) 7(a) loans originated between 1984 and 2012. On average, we find that rural loans are about 11% less likely to default than urban loans, and that a standard deviation increase in social capital reduces default by about 5%. Surprisingly, these two effects are largely independent of each other, even though social capital is substantially higher in rural places than in urban places. Our findings advance the small business lending literature and offer insights for a more efficient allocation of SBA funds.
October 2018
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158 Reads
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44 Citations
Journal of Banking & Finance
We test whether small US commercial banks that use a traditional business model are more likely to survive than nontraditional banks during both good and bad economic climates. Our concept of bank survival is derived from Stigler (1958) and includes any bank that does not fail or is not acquired. We define traditional banking by four hallmark characteristics: relationship loans, core deposit funding, revenue streams from traditional banking services, and physical bank branches. Banks that adhered more closely to this business strategy were an estimated 8 to 13 percentage points more likely to survive from 1997 to 2012 compared to other small banks using less traditional business strategies. This survival advantage approximately doubled during the financial crisis period.
January 2016
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26 Reads
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5 Citations
SSRN Electronic Journal
Citations (84)
... Banks gain specialized knowledge of the local economy to profitably underwrite loans to individuals and small businesses and are in constant contact with local economic players. This fosters long-term relationships (DeYoung 2002). However, bank acquisitions, particularly out-of-market banks, can hinder such relationships and reduce small business lending by lowering credit access. ...
- Citing Article
December 2002
The Journal of Entrepreneurial Finance
... The size of the pay gap between executives will inevitably affect the behavior of executives. The most common way for executives to reallocate corporate resources is insider trading, which will certainly have a significant impact on the capital allocation efficiency of enterprises [4][5]. ...
- Citing Article
June 2021
Journal of Financial Intermediation
... They found that borrowers with high social capital paid less interest when the lenders had high social capital. DeYoung et al. (2019) found that the default rates on loans decreased by about 5% for a one standard deviation increase in social capital. ...
- Citing Article
January 2019
The Journal of Entrepreneurial Finance
... The meaning and practice of Credit Union Sauan Sibarrung (accountability refer to the way or practice of the actions of Credit Union Sauan Sibarrung personnel in practicing it in daily life, so that ethnomethodology is the right design to be used in this research. This research will be conducted at Credit Union Sauan Sibarrung (DeYoung et al., 2019;Maia et al., 2019) which is one of the Credit Unions in Indonesia located in Tana Toraja Regency, South Sulawesi Province. Informants in this study are people who understand accountability. ...
- Citing Article
January 2019
SSRN Electronic Journal
... Third, DeLong (2001) shows that close bank mergers enhance stockholder value considerably more than distant ones (see also Cornett et al. 2006;Delong & DeYoung, 2007 for further evidence). Berger and DeYoung (2006) use agency theory to show how geography may affect bank performance. Deng and Elyasiani (2008) and DeYoung et al. (2008) also recognize distance in their works. ...
- Citing Article
June 2002
Finance and Economics Discussion Series
... In European markets, however, domestic banks were found to be more efficient than banks from other EU countries and other foreign banks (Berger et al, 2000). This suggests that the barriers to cross-border consolidation have offset the potential efficiency gains of the European financial deregulation process (Berger et al, 2001c). ...
- Citing Article
August 2000
Finance and Economics Discussion Series
... We hypothesize that one prominent benefit inventor proximity to headquarters is improved management of innovation production. Proximity increases principals' monitoring ability (Campbell et al. 2009), thereby reducing agency problems, such as shirking, employee misconduct (Heese and Pérez-Cavazos 2020), and potential inefficiency in execution and implementation (Berger and DeYoung 2001). Furthermore, proximity enhances information exchange by increasing the probability of serendipitous interaction, lowering the cost of scheduled interaction (Catalini 2018), and making it easier for managers and staff at headquarters to give advice (Giroud 2013). ...
- Citing Article
January 2001
Finance and Economics Discussion Series
... If P/B higher than 1, investors expect future earnings or growth, common in technology and financial firms. In financial theory, the Non-Performing Loan Ratio (NPL) serves as a key proxy for asset quality [9]. As NPL rises, provisions for bad debts and impairment losses increase, reducing book value per share. ...
- Citing Article
May 1997
Finance and Economics Discussion Series
... Otra corriente de la literatura relacionada con nuestro estudio busca comparar el desempeño de los bancos locales y extranjeros. Berger et al. (2000) establecieron la hipótesis de que los bancos extranjeros tienen ventajas globales relacionadas con un mejor manejo del riesgo, con factores productivos de mayor calidad y con una mayor tecnología de la información. Estas características de las entidades bancarias globales permiten tomar ventajas y ser más eficiente que las instituciones locales (Hartmann, Straetmans y De Vries, 2005;Berger, 2007;Beck, Ioannidou y Schäfer, 2018). ...
- Citing Article
March 2000
Finance and Economics Discussion Series
... Consequently, the correct valuation of the issuing firm that might allow to set IPO offer prices efficiently depends on the due diligence and bookbuilding process in the primary market. Because the issuing firm is informationally opaque to investors and information is costly (Note 3), the issuer retains a (relationship) investment bank to act as its agent in pricing and marketing the new stocks (Ibbotson & Ritter, 1995;Calomiris & Pornrojnangkool, 2009;DeYoung & Li, 2019). This makes multiple agency problems likely to come out at the IPO pricing stage (Baron, 1982). ...
- Citing Article
- Publisher preview available
August 2019
Journal of Financial Services Research