The Impact of Federal Deposit Insurance on Savings and Loan Failures

Richard Cebula ()

MPRA Paper from University Library of Munich, Germany

Abstract: This study empirically investigates the hypothesis that a higher real ceiling on federal deposit insurance leads to an increased failure rate for savings and loans (S&Ls). After providing a history of federal deposit insurance, a formal model is developed. The empirical analysis thereof examines both the percentage of federally insured S&Ls that failed and the number thereof that failed. The results were consistent for both sets of estimates. Among other things, the time-series estimates reveal that the S&L failure rate over the 1965-1989 study period were a decreasing function of the real price of imported crude oil, the mortgage portfolio yield, and the average capital-asset ratio. In addition, the S&L failure rate was found to be an increasing function of the cost of deposits, the volatility of the mortgage portfolio yield, recession, and, finally, the real ceiling per account on federal deposit insurance.

Keywords: financial institution failures; federal deposit insurance; mortgage interest rates; mortgage rate volatility; cost of deposits (search for similar items in EconPapers)
JEL-codes: E43 G23 G28 H42 (search for similar items in EconPapers)
Date: 1992-03-12
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

Published in Southern Economic Journal 4.59(1993): pp. 620-628

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/51540/1/MPRA_paper_51540.pdf original version (application/pdf)

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:pra:mprapa:51540

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().