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Reciprocal deposits and incremental bank risk

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  • Sherrill Shaffer

Abstract

Even after controlling for other observable factors, reciprocal deposits are associated with higher bank risk as measured by the probability of failure and the Z -score. These results are consistent with the moral hazard hypothesis and reject the risk substitution hypothesis.

Suggested Citation

  • Sherrill Shaffer, 2013. "Reciprocal deposits and incremental bank risk," Applied Economics, Taylor & Francis Journals, vol. 45(34), pages 4857-4860, December.
    • Handle: RePEc:taf:applec:v:45:y:2013:i:34:p:4857-4860
    DOI: 10.1080/00036846.2013.806784
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    References listed on IDEAS

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    1. Shaffer, Sherrill, 2012. "Reciprocal brokered deposits and bank risk," Economics Letters, Elsevier, vol. 117(2), pages 383-385.
    2. DeYoung, Robert & Hasan, Iftekhar, 1998. "The performance of de novo commercial banks: A profit efficiency approach," Journal of Banking & Finance, Elsevier, vol. 22(5), pages 565-587, May.
    3. Laeven, Luc & Levine, Ross, 2009. "Bank governance, regulation and risk taking," Journal of Financial Economics, Elsevier, vol. 93(2), pages 259-275, August.
    4. Shaffer, Sherrill, 1998. "The Winner's Curse in Banking," Journal of Financial Intermediation, Elsevier, vol. 7(4), pages 359-392, October.
    5. Turk Ariss, Rima, 2010. "On the implications of market power in banking: Evidence from developing countries," Journal of Banking & Finance, Elsevier, vol. 34(4), pages 765-775, April.
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    Cited by:

    1. Li, Guo & Shaffer, Sherrill, 2015. "Reciprocal brokered deposits, bank risk, and recent deposit insurance policy," The North American Journal of Economics and Finance, Elsevier, vol. 33(C), pages 366-384.
    2. Edward Simpson Prescott & Grant Rosenberger, 2024. "Reciprocal Deposits and the Banking Turmoil of 2023," Economic Commentary, Federal Reserve Bank of Cleveland, vol. 2024(14), pages 1-12, August.

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    More about this item

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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