Fundamentals of financial institutions management
In: The Irwin/McGraw-Hill series in finance, insurance, and real estate
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In: The Irwin/McGraw-Hill series in finance, insurance, and real estate
In: The McGraw-Hill Education series in finance, insurance, and real estate
"The last 30 years have been dramatic for the financial services industry. In the1990s and 2000s, boundaries between the traditional industry sectors, such as commercial banking and investment banking, broke down and competition became increasingly global in nature. Many forces contributed to this breakdown in interindustry and intercountry barriers, including financial innovation, technology, taxation, and regulation. Then in 2008-2009, the financial services industry experienced the worst financial crisis since the Great Depression. Even into the mid-2010s, the U.S. and world economies have not recovered from this crisis. It is in this context that this book is written. As the economic and competitive environments change, attention to profit and, more than ever, risk become increasingly important. This book offers a unique analysis of the risks faced by investors and savers interacting through both financial institutions and financial markets, as well as strategies that can be adopted for controlling and better managing these risks. Special emphasis is also put on new areas of operations in financial markets and institutions such as asset securitization, off-balance-sheet activities, and globalization of financial services."
Why are financial "institutions special" -- Financial services : depository institutions -- Financial services : finance companies -- Financial services : securities brokerage and investment banking -- Financial services : mutual funds and hedge funds -- Financial services : insurance -- Risks of financial institutions -- Interest rate risk I -- Interest rate risk II -- Credit risk : individual loan risk -- Credit risk : loan portfolio and concentration risk -- Liquidity risk -- Foreign exchange risk -- Sovereign risk -- Off-balance-sheet risk -- Technology and other operational risks -- Managing risk -- Liability and liquidity management -- Deposit insurance and other liability guarantees -- Capital adequacy -- Product and geographic expansion -- Futures and forwards -- Options, caps, floors, and collars -- Swaps -- Loan sales -- Securitization -- Appendix -- Index
In: Financial Markets, Institutions, and Instruments, Forthcoming
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In: Journal of economics and business, Band 57, Heft 5, S. 411-432
ISSN: 0148-6195
This study provides an empirical analysis of the impact of Wisconsin and Ohio pension cut legislation on values of banks operating in Wisconsin and Ohio, banks operating in other states in which pension cut legislation was being considered as Wisconsin and Ohio went through its legislative process, and all publicly traded U.S. banks. We find that banks doing business in Wisconsin and Ohio experience positive (negative) stock price reactions to announcements that indicate an increased (a decreased) probability of pension cut legislation. The stock price reactions are positively related to the extent to which banks operate in Wisconsin and Ohio. Stock price reactions are rarely evident for banks in the other thirteen states that were considering pension cut legislation during the period of analysis. We also find municipal bond spreads tighten and bank credit supply increases with pension cut legislation. Overall, the findings suggest states' budget cuts affect bank values and credit supply through their municipal bond holdings.
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In: Review of financial economics: RFE, Band 20, Heft 1, S. 11-21
ISSN: 1873-5924
AbstractPost‐IPO banks are far more likely to initiate dividends than nonfinancial IPO firms. Moreover, dividend initiation has a significant impact on the ultimate disposition of a newly public bank, increasing its likelihood of subsequent acquisition by around 40% and reducing the expected time until acquisition by 83%. Conditional on being acquired, dividend initiation increases the average takeover premium by about 55% of the market value of the bank in the month prior to the takeover announcement. Dividend initiating banks are also more mature, as indicated by asset growth rates, profitability, risk measures, and corporate governance measures. The initiation of the dividends and the ultimate sale of the firm may be consequences of the same underlying driver—maturity—but the dividend initiation appears to expedite the process by confirming the status of the firm and by drawing attention to the bank's readiness and willingness to be acquired. Dividend initiation thus seems to speed up and amplify the rewards to owners that may be reaped through an ultimate sale of the institution.
We study market reactions to seasoned equity issuances that were announced by financial companies between 2002 and 2013. To assess the risk and valuation implications of these seasoned equity issuances, we conduct an event analysis using daily credit default swap (CDS) and stock market pricing data. The major findings of the paper are that CDS prices respond quickly to new, default-relevant information. Over the full sample period, cumulative abnormal CDS spreads drop in response to equity issuance announcements. The reactions are significantly stronger during the financial crisis. At that time, the federal government injected equity into financial institutions to ensure their viability. The market reacted to the equity issue announcements by assessing significantly lower costs for default protection via credit default swaps. The evidence indicates that single-name CDS based on financial firms' default probabilities are potentially useful for private investors and regulators.
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