The interstate banking and branching efficiency act of 1994: a wealth event for acquisition targets

Article Abstract:

The institution of the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 produced significant wealth for bank holding companies, especially since it acted as a liberalization on their branching and acquisition activities. Aside from this form of wealth creation, additional wealth creation effects were contributed by investors, since the liberalization effect was enhanced by increased investor capital inputs into their bank holding companies. The synergistic effect of both factors created an average return of 2.2% on investments.

Bank Branching & Chartering, Finance, Branch banks, Bank holding companies, Charters (Law)

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On the strategic role of high leverage in entry deterrence

Article Abstract:

The strategic role played by high levels of debt and bankruptcy risk as barriers to entry into monopolistic markets is investigated. It is shown that these factors can be employed by an incumbent monopolist to block the entry of potentially strong competition. Confronted with potential entrants with varying abilities to compete, the incumbent will only allow the entry into the market of firms with weaker abilities to capture market shares.

Research, Competition (Economics), Economic aspects, Monopolies, Barriers to entry (Industrial organization), Barriers to entry, Debt financing (Corporations), Debt financing, Leverage (Finance), Leverage, Bankruptcy

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Forbearance, deposit insurance pricing, and incentive compatible bank regulation

Article Abstract:

Forbearance on the part of the bank regulator which delays the closure of an insolvent bank may be a part of a mechanism alleviating risk-shifting behavior of banks although risk adjusted deposit insurance premiums need not be included in such a mechanism.

Canada, Deposit Interest Regulation, Statistical Data Included, Analysis, Interest rates, Banking law, Deposit insurance, Bank failures

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