Regulatory distortion of management compensation: the case of golden parachutes for bank managers

Article Abstract:

A study on the adoption of golden parachutes in the banking industry in the 1980s gave proof that boards of directors opportunistically adopted golden parachutes before the failure of major banks to take advantage of the guarantee provided by Federal Deposit Insurance Corporation (FDIC). Parachute adoption, which was correlated with ex post and ex ante poor performance in banks, likewise virtually stopped when the FDIC Improvement Act withdrew the guarantee provided by the FDIC. The study, however, found out that CEO exploitation was not the primary motive behind parachute adoption and no strong evidence to prove the optimal entrenchment and incentive alignment hypotheses.

Management, Corporate directors, Powers and duties, Golden parachutes, United States. Federal Deposit Insurance Corp.

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The exchange rate exposure of U.S. and Japanese banking institutions

Article Abstract:

A study on the foreign exchange exposure of Japanese and US banks has shown that the stock returns of some of the Japanese banks studied were sensitive to changes in the exchange rate. The stock returns of about one-third of the 30 major US banks studied, however, were sensitive to exchange rate changes. The difference in the US and Japanese banks' sensitivities to the exchange rate can probably be attributed to the deviances between the regulatory conditions and operations of the two nations' banking institutions. The exposure of a foreign exchange was also found to have a negative relationship with a bank holding firm's net foreign asset position.

Administration of General Economic Programs, Foreign Exchange & Reserves Policy, Japan, Prices and rates, Foreign exchange, Foreign exchange rates

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Evaluating the cost-efficiency of the Italian banking system: what can be learned from the joint application of parametric and non-parametric techniques

Article Abstract:

The study regarding bank efficiency has developed two independent techniques, Data Envelopments Analysis and econometric studies. These methods have been verified by a common panel of 270 Italian banks. The tests recommended several findings. Econometric programming is not far from others if it is based on conceptual network and the same data. Small banks have an advantage over bigger banks in terms of gathering data regarding a possible borrower due to their better knowledge of productive system in their area.

Italy

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