We assess the market microstructure properties of U.S. banking firms? equity, to determine whether they exhibit more or less evidence of asset opaqueness than similar-sized nonbanking firms. The evidence strongly indicates that large banks (traded on the NYSE) have very similar trading...

We compare the timeliness and accuracy of government supervisors versus market participants in assessing the condition of large U.S. bank holding companies. We find that supervisors and bond rating agencies both have some prior information that is useful to the other. In contrast, supervisory...

We compare the timeliness and accuracy of government supervisors versus market participants in assessing the condition of large U.S. bank holding companies. We find that supervisors and bond rating agencies both have some prior information that is useful to the other. In contrast, supervisory...

U.S. banks hold significantly more equity capital than required by their regulators. We test competing hypotheses regarding the reasons for this ldquo;excessrdquo; capital, using an innovative partial adjustment approach that allows estimated BHC-specific capital targets and adjustment speeds to...

Unlike equity offerings or public debt offerings, bank loan financing elicits a significantly positive announcement return, which has led financial economists to characterize bank loans as quot;specialquot; or somehow different from other types of external finance. Here, we find that firms...

In a developed economy, financial crises are rapidly conveyed to the payment system, which tends to rely on private credit extensions in most countries. While many authors recommend that the central bank do no more than provide adequate aggregate liquidity during a crisis, this policy requires...

Market discipline is an article of faith among financial economists, and the use of market discipline as a regulatory tool is gaining credibility. Effective market discipline involves two distinct components: security holders' ability to accurately assess the condition of a firm (monitoring) and...

Do federal bank examinations add value to the market's supervisory process? To address this question, we investigate whether Federal Reserve inspections of bank holding companies affect the association between banks' reported book value and the market value of their equity. Using data from the...

Stock market returns are known to be significantly correlated with inflation and money growth. The impact of real macroeconomic variables on aggregate equity returns has been difficult to establish, perhaps because their effects are neither linear nor time-invariant. We estimate a GARCH model of...