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Bank failures in the U.S.: A note on regulation Q

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  • Anthony Ostrosky

Abstract

Bank failures in the U.S. have increased enormously since 1981. In order to explain this situation, certain factors have been identified—recession, the cost of funds to banks, and the Tax Reform Act of 1986. In addition, the interest rate ceilings imposed upon banks in the U.S. under Regulation Q (until its elimination) have been suggested as a possible contributing cause of the bank failure problem. The purpose of this paper is to provide an initial, formal, and empirical investigation into whether or not Regulation Q did influence the bank failure rate in the U.S. In fact, Regulation Q appears to have been a statistically significant contributor to the commercial bank failure rate. Copyright International Atlantic Economic Society 1997

Suggested Citation

  • Anthony Ostrosky, 1997. "Bank failures in the U.S.: A note on regulation Q," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 3(2), pages 176-180, May.
  • Handle: RePEc:kap:iaecre:v:3:y:1997:i:2:p:176-180:10.1007/bf02294938
    DOI: 10.1007/BF02294938
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    References listed on IDEAS

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    1. Boskin, Michael J, 1988. "Tax Policy and Economic Growth: Lessons from the 1980s," Journal of Economic Perspectives, American Economic Association, vol. 2(4), pages 71-97, Fall.
    2. Keeley, Michael C, 1990. "Deposit Insurance, Risk, and Market Power in Banking," American Economic Review, American Economic Association, vol. 80(5), pages 1183-1200, December.
    3. James R. Barth, 1991. "The Great Savings and Loan Debacle," Books, American Enterprise Institute, number 918256, September.
    4. Pechman, Joseph A, 1987. "Tax Reform: Theory and Practice," Journal of Economic Perspectives, American Economic Association, vol. 1(1), pages 11-28, Summer.
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