ISSN:1080-8620    

DOI:10.1111/1540-6229.00623

出版商:Blackwell Publishing Ltd    

年代:1994

数据来源: WILEY

摘要:

This study surveys a broad range of information to establish the degree to which real estate lending and construction activity decreased in the 1989–92 period owing to a “credit crunch.” It reviews the conditions that led up to the contraction in mortgage lending and construction and then documents the extent to which the evidence is consistent with a credit crunch in lending for residential and nonresidential construction, permanent financing of income properties, and residential mortgage lending. Also, this study weighs the relative importance of the credit crunch and other factors that contributed to the falloff in real estate lending and contrasts the recent period with earlier credit crunch epi

ISSN:1080-8620    

DOI:10.1111/1540-6229.00624

出版商:Blackwell Publishing Ltd    

年代:1994

数据来源: WILEY

摘要:

The stock of real estate loans held by New England banks has declined dramatically. Given the limited potential for real estate investments, weak demand for real estate loans is to be expected. However, supply as well as demand factors may account for some of the decline in bank real estate loans. This paper documents that bank lending for real estate may have been constrained by a capital crunch, whereby poorly capitalized banks shrank their assets, including real estate loans, to satisfy capital requirements. Because the loss of bank capital is so widespread in New England, bank‐dependent borrowers may have difficulty obtaining real estate financin

ISSN:1080-8620    

DOI:10.1111/1540-6229.00625

出版商:Blackwell Publishing Ltd    

年代:1994

数据来源: WILEY

摘要:

We investigated whether in recent years banks have increased their holdings of securities at the expense of their holdings of business loans in response to shortfalls of their capital relative to risk‐weighted capital standards and relative to a capital standard that made no explicit allowance for credit risk. We estimated that bank credit fell by about $4.50 for each $1 that a bank's capital fell short of the unweighted capital standard. Banks that had less capital than required by the risk‐weighted standard appear to have shiftedawayfrom assets with low risk weights (securities and single‐family mortgages) and to have shiftedtowardassets with higher risk weights (commercial real estate and commercial and industrial loans). When we included both shortfall variables in a regression, shortfalls relative to the unweighted capital standard significantly affected bank credit, while shortfalls of capital relative to the risk‐weighted standard did not. We found no significant effects of capital shortfalls at other, local‐competitor banks on bank portfolios. Delinquencies in a given category of a bank's loans generally had significantly negative effects on that bank's holdings of loans in that category. In contrast, banks tended to increase holdings of loans in categories in which local‐competitor banks were experiencing higher delinq

ISSN:1080-8620    

DOI:10.1111/1540-6229.00626

出版商:Blackwell Publishing Ltd    

年代:1994

数据来源: WILEY

摘要:

We estimate quarterly return series from March 1984 through December 1989 for 10 classes of thrift assets using the statistical cost‐accounting methodology of Hester and Zoellner (1966). We then use these return series to estimate mean‐variance efficient frontiers for all thrifts, for thrifts that were well capitalized two years earlier and for thrifts that were insolvent two years earlier. Our results show that neither the asset restrictions existing before nor those in effect after passage of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 would have prevented thrifts from reaching most of the portfolios along the efficient frontier. The actual portfolio chosen by well‐capitalized thrifts is close to the estimated efficient frontier, while the actual portfolio chosen by insolvent thrifts is located far from the frontier in the high‐risk end of investment space. These findings, coupled with the high proportion of nontraditional assets in the actual portfolio chosen by insolvent thrifts, support the hypothesis that moral hazard induced thrifts to take on investments that were excessively risky from the deposit insurer's point

ISSN:1080-8620    

DOI:10.1111/1540-6229.00627

出版商:Blackwell Publishing Ltd    

年代:1994

数据来源: WILEY

摘要:

The purpose of this paper is to develop a model of the asset disposition decision for the Resolution Trust Corporation (RTC). In this paper, we focus on the primary goal of the RTC—to maximize the net present value of the cash flows generated through holding and selling the assets it acquires. A major decision it faces is whether to hold or sell assets. This decision ultimately depends on the RTC's discount rate versus that of the marginal buyer. A second question relates to the decision of which assets to sell first and which ones to delay sale. The model developed in this paper characterizes the asset disposition decision process of the RTC for different types of assets. We develop a set of optimal disposition rules based on the simple premise of a multi‐period cash flow maximization. In addition, we test some of these rules by analyzing RTC disposition performance. Through this exercise, we hope to provide some guidance to the RTC in implementing its enormous task as well as to policy makers in charting the progress of the RTC. The main results of this analysis indicate that liquid assets and retail deposit franchises should be sold as quickly as possible. Illiquid assets that are performing and do not have high servicing costs are good candidates to finance through senior/subordinated securities or sale with seller financing by the RTC. Illiquid non‐performing assets are good candidates for equity participation financing by the RTC. The sales proceeds obtained by the RTC will be increased if buyers have greater certainty with respect to expected cash flows and RTC sales pol

ISSN:1080-8620    

DOI:10.1111/1540-6229.00628

出版商:Blackwell Publishing Ltd    

年代:1994

数据来源: WILEY

摘要:

Current methods of failed bank resolution are unnecessarily expensive for taxpayers and impose substantial costs on borrowers at failed banks. This situation is the result of distorted incentives imbedded in the standard contract between the government and acquirers of failed banks, which result in more loan foreclosures than if the loan were held by a well‐capitalized bank. This paper proposes a modification to the standard contract in the form of a transferable put, which would introduce market‐based incentives to the disposition of failed bank ass

ISSN:1080-8620    

DOI:10.1111/1540-6229.00629

出版商:Blackwell Publishing Ltd    

年代:1994

数据来源: WILEY

摘要:

As a result of declining real estate values and the receivership of numerous financial institutions, government regulators like the Resolution Trust Corporation (RTC) and Federal Deposit Insurance Corporation (FDIC) have large inventories of distressed assets. This paper develops a model of the principal/agent issues associated with management and disposition of problem assets. In the model, optimal contracts balance risk sharing with incentives for effort. We argue that the RTC will minimize the ultimate cost of the thrift crisis by placing managerial control of distressed assets in the private sector, while retaining full or partial ownership of the assets for risk‐sharing purposes. Recoveries are maximized, however, only when an asset manager is incented to expend a first‐best level of effort by indexing asset management and disposition contracts to market moveme

ISSN:1080-8620    

DOI:10.1111/1540-6229.00630

出版商:Blackwell Publishing Ltd    

年代:1994

数据来源: WILEY

摘要:

Using data on 1,360 savings and loan (S&L) institutions, we compare two non‐parametric methods for measuring efficiency: data envelopment analysis (DEA) and algebraic methods based on Varian (1984). We show that both methods are vulnerable to measurement error, although both theoretically and empirically we find the Varian‐style measures to be less vulnerable. Because we have data on the future insolvency of our S&Ls, we can directly compare the two methods by seeing which does a better job of predicting insolvency (working under the hypothesis that efficiency and insolvency should be negatively correlated). We find that various measures perform very similarly, except for the technical efficiency measure in DEA. Importantly, this last measure frequently yields the implausible result that efficiency and insolvency are positively correlated, possibly because it does not account for factor pri

ISSN:1080-8620    

DOI:10.1111/1540-6229.00631

出版商:Blackwell Publishing Ltd    

年代:1994

数据来源: WILEY