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An Analysis of Resolution Trust Corporation Transactions: Auction Market Process and Pricing

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  • Sudhir Nanda
  • James E. Owers
  • Ronald C. Rogers

Abstract

This article describes the operations of the Resolution Trust Corporation (RTC), examines the procedures it employs to resolve distressed Savings and Loan scenarios and investigates the pricing of transactions undertaken by the RTC. The RTC has been criticized for allegedly transferring properties to acquirers at “bargain” prices. The transactions involving publicly traded acquirers in RTC sales are examined from an auction theory perspective. Overall, there is little evidence that winning bidders experience stock price gains. There are, however, subsets of bidders for which the outcomes are predominantly negative. The only category of transactions which provide statistically significant gains to acquirers are Insured Deposit Transfers.

Suggested Citation

  • Sudhir Nanda & James E. Owers & Ronald C. Rogers, 1997. "An Analysis of Resolution Trust Corporation Transactions: Auction Market Process and Pricing," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 25(2), pages 271-294, June.
    • Handle: RePEc:bla:reesec:v:25:y:1997:i:2:p:271-294
    DOI: 10.1111/1540-6229.00715
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    Cited by:

    1. Engbith, Lily, 2021. "US Resolution Trust Corporation," Journal of Financial Crises, Yale Program on Financial Stability (YPFS), vol. 3(2), pages 129-175, April.

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