House Session | Video

Bank of New England failure

This paper considers the effects of the Bank of New England's failure on other banks. It is hypothesized that the more a bank's asset portfolio resembles that of the Bank of New England the more negative the response should be. The responses of different bank groups are considered, as a major factor in the Bank of New England's failure was a decline in real estate values which is often a regionalized phenomenon, over a series of announcements on the Bank of New England using a seemingly unrelated regression framework. The evidence indicates that some announcements cause bank share prices to decline significantly, particularly those in the New England area which may be expected to have asset portfolios which most closely resemble that of the Bank of New England. Finally, a cross-sectional regression is used to determine if the bank's responses to the announcements are related to their loan to asset or capital to asset ratios. Only the latter appear to be significant for a few announcements.

Source: www.sciencedirect.com
Share this Post

Related posts

Bank of New England Locations

Bank of New England Locations

SEPTEMBER 24, 2017

Are Not FDIC Insured Are Not Bank Guaranteed May Lose Value MLPF&S is a registered broker-dealer, Member SIPC and…

Read More
Bank of England inflation forecasts

Bank of England inflation forecasts

SEPTEMBER 24, 2017

Mr Carney’s problem is that every time he makes a big forecast he seems to get it wrong. When he came into office, the Governor…

Read More