Organizational structure and credibility: evidence from commercial bank securities activities before the Glass-Steagall Act

Article Abstract:

US commercial banks have employed other methods in managing investment banking operations before the implementation of the Glass-Steagall Act of 1933. The act restricted commercial banks from engaging in underwriting and trading corporate securities and eliminated any conflicts of interest between banks and customers. Alternative solutions to lessen such conflicts of interest without undermining a firm's efficiency are possible. Results indicate that the creation of internal structures in banking institutions can assuage doubts concerning conflicts of interest.

Management, Insider trading in securities, Insider trading (Securities), Conflict of interests (Agency), Universal banks, Conflicts of interest

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The permanent effects of innovation on financial depth: theory and US historical evidence from unobservable components models

Article Abstract:

Technological innovations in the intermediate sector have the ability to affect financial depth through its influence on loan seekers' application decisions and lenders' interest rate setting decisions. Particularly, an enhanced ability to monitor loan recipients reduces the burden of defaults for lenders and permits them to lower interest rates on loans. Such case indirectly leads to the creation of a large and efficient intermediate sector as stiff competition among lenders to obtain loanable funds results to higher deposit rate.

Analysis, Economic research, United States economic conditions

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Heterogeneity in bank valuation of LDC debt: evidence from the 1988 Brazilian debt-reduction program

Article Abstract:

A theoretical model of bank choice conduct was formulated and applied to data from the 1988 debt-reduction deal of Brazil. Empirical results indicate that bank attributes can account for over 80% of its preference of debt reduction program. Individual factors such as extent of business interest in debtor countries, nationality, and availability of business opportunities are seen to affect the banks exit behavior, confirming the predictions of the proposed model.

Economic aspects, Finance, Developing countries, Brazil, External debts, Sovereign debt market

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