Expense-Preference Behavior in the Savings and Loan Industry

Regulation, deregulation and managerial behaviour: new evidence on expense preference in banking

“…In his classic 1977 study of the banking industry, Edwards found empirical support for the expense preference theoretical framework, and argued that this theory better explained the general behaviour of managers in regulated ® rms than did a pro® t maximizing framework. In addition to Edwards, Hannan (1979), Hannan and Mavinga (1980) and Arnould (1985) found evidence of expense preference behaviour among commercial banks, while Verbrugge and Jahera (1981) found the same for savings and loans. Others, including Mester (1989) and Blair and Placone (1988) found little or no evidence of expense preference behaviour among savings and loans, particularly with regard to testing whether ownership form (stock or mutual) led to di erences in managerial behaviour.…”

The effect of UK building society conversion on pricing behaviour

“…For the United States, where mutual and shareholder owned savings and loans firms co-exist, Verbrugge and Golstein (1981), Verbrugge and Jahera (1981), Akella and Greenbaum (1988), and Blair and Placone (1988) produce evidence that the mutual S&Ls appear more affected by managers' expense preferences. 9 By contrast, Murphy and Salandro (1997) find that a decline in credit quality is more pronounced among converted mutuals.…”

Determining management behaviour in European banking

“…Differences in bank organisational structures, for instance, in terms of their ownership might explain variations in X-inefficiencies because of principal-agent problems that offset the conditioning effect that environmental pressure brings to bear on managerial effort. 1 This is an empirical issue, which has received considerable attention in the bank efficiency literature albeit yielding somewhat mixed or inconclusive results (see Verbrugge and Goldstein, 1981;Verbrugge and Jahera, 1981;Cebenoyan et al, 1993;Mester, 1993;Berger and Humphrey, 1997;Cummins and Zi, 1998;Altunbas et al, 2001). One limitation of the bank ownership-efficiency literature is that, in general, it simply determines whether banks organised under one ownership model are significantly more efficient than banks organised in another way.…”