Work

The Impact of Real Estate Lending on Thrifts' Franchise Values During the 2007–2009 Crisis: a Comparison With Commercial Banks

Year: 2016

Type: article

Abstract: The real estate bubble and 2007–2009 financial crisis revived the debate about the viability of the thrift charter and its imposed limits on lending diversification. We compare the impact of real estate exposure on franchise values of publicly traded thrifts and size‐matched banks during and after the crisis. Whereas thrifts are mostly exposed to residential real estate, banks have a higher concentration in commercial real estate (CRE), which is significantly associated with the decline in their franchise values. We conclude that the constraints on loan portfolio diversification, such as the one on CRE, are not detrimental to the thrift charter.

Source: The Journal of Financial Research

DOI: 10.1111/jfir.12089

Authors: Valentina Salotti, Natalya A. Schenck, John H. Thornton

Institutions: Iowa State University, Office of the Comptroller of the Currency, Kent State University

Language: English

Topic: Banking stability, regulation, efficiency

Subfield: Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: bronze

Funder: U.S. Department of the Treasury

OpenAlex ID: W2291234151

FWCI:

Cites: 51

Cited by: 1

Related to: 10