Why do banks disappear? The determinants of U.S. bank failures and acquisitions

David Wheelock and Paul Wilson

No 1995-013, Working Papers from Federal Reserve Bank of St. Louis

Abstract: This paper examines the determinants of individual bank failures and acquisitions in the United States during 1984-1993. We use bank-specific information suggested by examiner CAMEL-rating categories to estimate competing-risks hazard models with time-varying covariates. We focus especially on the role of management quality, as reflected in alternative measures of x-efficiency and find the inefficiency increases the risk of failure, while reducing the probability of a bank's being acquired. Finally, we show that the closer to insolvency a bank is, as reflected by a low equity-to-assets ratio, the more likely its acquisition.

Keywords: Bank; failures (search for similar items in EconPapers)
Date: 1995
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Citations: View citations in EconPapers (25)

Published in Review of Economics and Statistics, February 2000, 82(1), pp. 127-38

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Journal Article: Why do Banks Disappear? The Determinants of U.S. Bank Failures and Acquisitions (2000)
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