Risk, regulation, and S&L diversification into nontraditional assets

Article Abstract:

Market measures of total risk are evaluated in relation to asset portfolio composition of savings & loan associations (S&Ls). Based on their investment strategy, the evaluation concentrates on real estate specialized (RES) S&L lenders with substantial adjustable rate mortgages (ARMs), RES S&L lenders with a low proportion of ARMs and non real estate (NRES) S&Ls. Results indicate that branching into nontraditional assets tends to result in lower risk and higher average returns for RES S&Ls.

Savings & Loan Assns, Savings Institutions, Investments, Financial institutions, Bank investments, Savings and loan associations, Institutional investments

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DIDMCA and bank market risk: theory and evidence

Article Abstract:

The effect of the Depositary Institutions Deregulation and Monetary Control Act of 1980 on the market risk of the banking industry was analyzed. The results showed that deregulation has increased capitalized market bank risk. Changes in systematic risk were linked with bank size and foreign loan exposure. However, no evidence of any connection between changes in nonsystematic risk and bank operating characteristics was observed.

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The impact of standby letters of credit on bank risk: a note

Article Abstract:

The influence of standby letter of credit issuance on the risk factor of the issuing bank was investigated. The results showed that standby issuance effectively increased the systematic and total risk of bank stock returns. Equity markets price the off balance sheet risk of standby issuance, thus increasing risk for the issuing bank.

Interpretation and construction, Practice, Letters of credit

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