Loan commitments, investment decisions and the signalling equilibrium

Article Abstract:

The use of bank loan commitments has increased by 80% in the 90s. Loan commitments are a more effective way of financing new, risky investment projects compared to spot loans, as they result in overestimation allowing the cost to be totally carried by the firm in a competitive capital market. Loan commitments are a form of forward contracting which allow a vital sorting mechanism which spot loans cannot offer. The study analyses the implications of the use of loan commitments.

Investors, not elsewhere classified, Analysis, Loans, Commercial loans

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Fixed-rate deposit insurance and risk-shifting behavior at commercial banks

Article Abstract:

The existence of the FDIC fixed-rate deposit insurance scheme does not encourage widespread risk-shifting among US commercial banks. A test on a sample of US banks shows a negative relationship between asset and leverage risks of commercial banks despite the deposit insurance scheme. Thus, banks apparently do not attempt to shift their risks to the FDIC. Fears that risk-shifting increases after deregulation are also debunked in this study.

Commercial Banks, Insurance carriers, not elsewhere classified, Management, Deposit insurance, United States. Federal Deposit Insurance Corp.

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The Effects of Political, Economic and Institutional Development on International Banks

Article Abstract:

International banks currently face economic and financial problems which must be faced. Short-term liquidity problems are more prevalent than solvency problems. Full governmental assistance must be more available.

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