Lessons+from+a+Recent+Banking+Crisis

Lessons+from+a+Recent+Banking+Crisis - W ORKING WITH U .S....

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
W ORKING WITH U.S. B ANK D ATA L ESSONS FROM A R ECENT U. S. B ANKING C RISIS J OSEPH P. H UGHES DEPARTMENT OF ECONOMICS RUTGERS UNIVERSITY NEW BRUNSWICK, NJ 08901-1248 JPHUGHES @RCI.RUTGERS.EDU © 2008 BY JOSEPH P. HUGHES
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Table of Contents Preliminaries Introduction 1 Day of the Living Dead: Frightened Depositors Flee Zombie Banks Aren’t Banks Our Friends? How Well Do We Know Our Friends? How Trustworthy Are Our Friends? Safety in Numbers How Trustworthy Are Our Friends? Do They Take Their Own Advice? Running from Our Friends Why Do We Have Such Friends? Banks and Big Brother How Good a Monitor Is Big Brother? What to Ask of the Data 11 Adverse Selection: The Credit Quality of Borrowers Moral Hazard: Risk-Shifting by Borrowers The Informational and Incentive Advantage of Banks in Lending Questions for the Data Looking at the Data 16 Checking the Contents of the Data Set Producing Summary Statistics for Variables in the Data Set Additional Statistics Describing Bank Asset Allocation Using SAS to Ask Questions of the Data 20 How Risky Was the Bank of New England? How Risky Were Banks in New Jersey and New York? How Risky Were Banks in New England? Using Data to Explain Bank Risk-Taking
Background image of page 2
1 Meir Kohn, Money, Banking, and Financial Markets , 2nd edition, 1993, The Dryden Press Introduction: The Day of the Living Dead Frightened Depositors Flee Zombie Banks Jean Driscoll, the manager of the Bank of New England branch in Chestnut Hill, Mass., went to work on the morning of January 4 expecting it to be just another Friday in the affluent Boston suburb. But there was nothing routine about it. By 8:30 a.m., there were long lines of anxious depositors at the tellers' windows and cash machines, withdrawing their money. The phones rang steadily with calls from worried customers. Bank officers tried to calm account holders, assuring them that their savings were federally insured up to $100,000. But to little effect. There were similar scenes at many of the Bank of New England's 300 branches. Frantic depositors pulled nearly $1 billion out of the bank in two days; small savers trouped through the lobbies with their money in wallets, bulging envelopes and briefcases, and money managers yanked out multimillion-dollar deposits by remote control with computer and telex orders. Some local crooks even tried to get in on the action. The FBI said it foiled a plan by six men to rob an armored car they figured would be loaded with cash for all the withdrawals. ( The New York Times , February 18, 1992) Since the Great Depression and the creation of the Federal Deposit Insurance Corporation, bank runs in the United States have been rare, but not unknown. Meir Kohn, in Money, Banking, and Financial Markets , provides this illustration of a modern-day bank run from The New York Times . 1
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 10/02/2011 for the course GEOGRAPHY 101 taught by Professor Vancura during the Spring '08 term at Rutgers.

Page1 / 42

Lessons+from+a+Recent+Banking+Crisis - W ORKING WITH U .S....

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online