Work

Capital Structure and Monitoring Bank Failure

Year: 2015

Type: preprint

Abstract: This paper attempts to identify the financial symptoms preceding the failure of FDIC insured banks. It also examines the validity of proposed common principal factors that mimick CAMELS to detect meaningful signals prior to the bank failure. From empirical tests, this study finds that our mimicking factors indicate agency problem and large influx of loan size driving undesirable choice of capital structure, and that those mimicking factors are useful indicators to monitor bank performance and to detect the likelihood of bank failure.

Source: SSRN Electronic Journal

Authors: Seungho Baek, Siva K. Balasubramanian, Kwan Yong Lee

Institutions: City University of New York, Illinois Institute of Technology, University of North Dakota

Language: English

Topic: Banking stability, regulation, efficiency

Subfield: Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: green

OpenAlex ID: W2111903277

Cites: 36

Cited by: 3

Related to: 10