Recent profitability and recapitalization trends in the banking industry appear to be consistent with a hypothesis advanced by Keeley (1990) termed the quot;charter valuequot; hypothesis. Under this hypothesis banks with greater charter value voluntarily hold higher capital ratios to self-insure...

Conventional Wisdom holds that the enactment of federal deposit insurance helped small rural banks at the expense of large urban institutions. This paper uses asymmetric-information, agency-cost paradigms from corporate- finance theory and data on bank stock prices to show how deposit insurance...

This paper tests the optimal-contracting hypothesis, drawing upon data from a natural experiment that ended during the Great Depression. The subjects of our experiment are bank stockholders. The experimental manipulation concerns the imposition of state or federal restrictions on the contracts...

Valuable bank charters have been hypothesized to provide bank managers self-regulatory incentives to constrain their risk taking. However, this paper presents evidence that charter value itself may derive from high-risk activities, indicating that minimizing risk taking also would limit the...

Recent profitability and recapitalization trends in the banking industry appear to be consistent with a hypothesis advanced by Keeley (1990), Marcus (1984), Demsetz and Strahan (1996), and Demsetz, Saidenberg and Strahan (1996) termed the quot;charter valuequot; hypothesis. Under this hypothesis...