INVESTMENT POLICY, FINANCING POLICY, AND PERFORMANCE-CHARACTERISTICS OF DENOVO SAVINGS AND LOAN ASSOCIATIONS
Finance, Real Estate, and Business Law
This paper develops a simultaneous equation model to investigate the investment policies, financing policies, and risk/return characteristics of de novo thrift institutions. A model to explain state entry rates for de novo institutions is also presented. Entry dates are significantly influenced by investment powers as the numbers of de novo charters are found to be significantly higher in states with the most liberal set of permissible activities. Economic growth and the demand for financial services also contributed to higher entry rates. Utilization of the liberal powers did not, however, contribute positively to returns. Firms with riskier asset portfolios were found to have lower realized returns. Efficiency in operations and strong capitalization were found to be positively associated with higher returns.
JOURNAL OF BANKING & FINANCE
Lindley, J. T.,
(1992). INVESTMENT POLICY, FINANCING POLICY, AND PERFORMANCE-CHARACTERISTICS OF DENOVO SAVINGS AND LOAN ASSOCIATIONS. JOURNAL OF BANKING & FINANCE, 16(2), 313-330.
Available at: http://aquila.usm.edu/fac_pubs/6780