Liquidation under moral hazard: optimal debt maturity and loan commitments

Article Abstract:

The advantages and disadvantages of loan commitment financing are considered. It is generally accepted that one of the biggest benefits of bank loan commitments is the prearranged source of financing it provides to companies that allows them to continue operations. However, it is shown that the benefits of loan commitment financing may be limited by a number of firm characteristics. This finding may account for the observation that loan commitments are not universally used.

Finance, Corporations, Corporate finance, Capital formation

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Factors influencing the decisions of bank managers: the evidence from investment portfolios

Article Abstract:

Large banks in the US do not appear to outperform the market in the management of security portfolios. Many banks, in fact, view the investment portfolio as a device for offsetting the interest rate risks acquired elsewhere in the balance sheet. Banks that bear less interest rate risks are less likely to gain positive excess returns. Some banks even sacrifice returns in the investment portfolio to reduce interest rate risk to the bank as a whole.

Commercial Banks, Methods, Banking industry, Management, Investments, Portfolio management, Bank investments

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Do bank internal capital markets promote lending?

Article Abstract:

A bank's organizational structure is found to have a significant effect on lending in the sense that affiliated banks are more responsive to local markets and are willing to lend so long as there are opportunities. The study seeks to find the differences in lending practices of affiliated and non-affiliated banks and finds that affiliated banks establish internal markets in efforts to allocate capital among subsidiaries.

Banking Institutions, Depository Credit Intermediation, DEPOSITORY INSTITUTIONS, Analysis, Banks (Finance), Financial markets

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