Franchise value, ownership structure, and risk at savings institutions

Elijah Brewer and Marc R. Saidenberg

No 9632, Research Paper from Federal Reserve Bank of New York

Abstract: This paper examines the relationship between asset risk and franchise values and between asset risk and ownership structure. Stock price data from publicly traded S&L is used to measure portfolio risk and franchise or charter values. The empirical results provide support for the moral hazard hypothesis. The standard deviation of equity returns is negatively related to S&L franchise values, as measured by the market-to-book asset ratio. This research also finds empirical support for models of managerial entrenchment in the thrift industry. We find evidence of a nonlinear relationship between risk and insider control. The standard deviation of equity returns initially falls then rises as ownership is concentrated in the hands of officers and directors.

Keywords: Deposit insurance; Savings and loan associations (search for similar items in EconPapers)
Date: 1996
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
https://www.newyorkfed.org/medialibrary/media/rese ... arch_papers/9632.pdf (application/pdf)
https://www.newyorkfed.org/medialibrary/media/rese ... rch_papers/9632.html (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fednrp:9632

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in Research Paper from Federal Reserve Bank of New York Contact information at EDIRC.
Bibliographic data for series maintained by Gabriella Bucciarelli ().