Hostname: page-component-78c5997874-j824f Total loading time: 0 Render date: 2024-11-15T07:07:28.212Z Has data issue: false hasContentIssue false
  • English
  • Français

Large Bank Failures and Investor Risk Perceptions: Evidence from the Debt Market

Published online by Cambridge University Press:  06 April 2009

Donald R. Fraser  and
J. Patrick McCormack
Get access Rights & Permissions [Opens in a new window]

Extract

The commercial banking industry has been buffeted by a variety of forces in recent years. Alternating periods of intense monetary restraint and the severity of the 1973–74 economic contraction (especially as it affected the real estate industry), huge losses on loan portfolios, a heavy commitment of funds to less developed countries on the part of a few major banks, and the failures of a number of individual banks have created considerable discussion about the stability of the banking system. Questions have been raised about the risk involved in committing funds to the securities of banking organizations. Moreover, the importance of these questions has been underscored for bank management by the necessity for many banking organizations to raise substantial amounts of external funds to prevent further depletion of existing capital ratios.

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , Volume 13 , Issue 3 , September 1978 , pp. 527 - 532
Copyright
Copyright © School of Business Administration, University of Washington 1978

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

REFERENCES

[1]Fisher, L. “Determinants of Risk Premiums on Corporate Bonds.” Journal of Political Economy (06 1959), pp. 217–237.CrossRefGoogle Scholar
[2]Herzig-Marx, Chayim. “Financial Disclosure and Market Evaluations of Debt Securities.” Occasional Paper 76–4, Federal Reserve Bank of Chicago (1976).Google Scholar
[3]Humphrey, David B., and Talley, Samuel H.. “Market Regulation of Bank Leverage.” Research Paper in Banking and Financial Economics, Board of Governors of the Federal Reserve System (1975).Google Scholar
[4]Pettway, Richard H.. “Market Tests of Capital Adequacy of Large Commercial Banks.” Journal of Finance (06 1976), pp. 865–875.Google Scholar
[5]Pettway, Richard H.. “The Effects of Large Bank Failures upon Investors’ Risk Cognizance in the Commercial Banking Industry.” Journal of Financial and Quantitative Analysis (09 1976), pp. 465–477.CrossRefGoogle Scholar
[6]Sinkey, Joseph F. Jr., “The Collapse of Franklin National Bank of New York.” Journal of Bank Research (Summer 1976), pp. 113–122.Google Scholar