Investment policy, financing policy, and performance characteristics of de novo savings and loan associations

Loan loss provision decisions: An empirical analysis of the Spanish depository institutions

“…We incorporated variables identified as the most relevant in estimating inefficiency to develop the "best practice" LLP. These variables are those that have been suggested in the literature as affecting inefficiency (Aly, Grabowski, Pasurka, & Rangan, 1990;Beatty et al, 1995;Berger & DeYoung, 1997;Berger & Hannan, 1989;Cebenoyan, Cooperman, Register, & Hudgins, 1993;Hasan, Hunter, & Lozano, 1999;Hermalin & Wallace, 1994;Kaparakis, Miller, & Noulas, 1994;Lindley, Verbrugge, McNutty, & Gup, 1992;Moyer, 1990;Mester, 1993Mester, , 1996Pi & Timme, 1993). The variables included (a) current loan loss to asset ratio, and losses on exchanges (since theory suggests that LLP estimation is a function of anticipated losses); (b) surrogate variables for exposure and perceived risk of outstanding assets (liquid assets to total assets, risky loans to total assets, and total loans to assets); and (c) variables that characterize the local economic environment (per capita income).…”

The temporal nature of growth determinants in new bank foundings: implications for new venture research design

“…Product breadth is a combination of both the dispersion and number of products offered to the market (Romanelli, 1989). This construct taps the entire range of decisions available to a bank that stretches from retail to commercial and includes numerous product level decisions within that range (Arshadi and Lawrence, 1987;Lindley et al, 1992;Reger et al, 1992). While banks are authorized to offer a very large number of products, once beyond the basics (e.g., checking, savings, etc.)…”

Risk taking and failure in de novo savings and loans in the 1980s

“…This is further documented for all FSLIC-insured institutions by McKenzie, Cole, and Brown (1992). Lindley, Verbrugge, McNulty, and Gup (1992) document that de novo institutions with riskier asset portfolios had lower realized returns. In addition, there has been considerable anecdotal analysis of the relative importance of fraud, inadequate monitoring, and political interference as contributing factors to the S&L mess (Kane 1989).…”

“…Hunter and Srinivasan (1990) estimate the effects of changes in various asset and liability strategies on the probability of success of de novo commercial banks and conclude that management decision factors rather than external market forces are the most important factors influencing the likelihood of success. Lindley, Verbrugge, McNulty, and Gup (1992) examine the investment and financing policies of de novo savings and loans but do not examine the potential failure consequences of those policies.…”

“…This surge of entry was spurred by expanded asset powers provided to federally chartered S&Ls in early 1980s legislation, lowered barriers to entry by both state and federal chartering authorities, and increased access to federally insured deposits as a source of funds. Lindley, Verbrugge, McNulty, and Gup (1992) provide evidence indicating that the entry of over 350 de novo S&Ls into the industry between 1980 and 1987, 72 percent ofwhichwere state-chartered institutions, resulted from the interaction of several regulatory and market forces, including exceptionally liberal asset powers for state-chartered institutions in certain states. 1 It has been suggested (White, 1991, p. 73) that the liberalization of asset powers in certain states was a direct response to the broadened powers granted to federally chartered institutions in 1980 and 1982.…”