comments by Evren

1
comments by Evren ÖRSHEC Paris
45th Conference on Bank Structure Competition
Session on Bank Structure Competition
2
Session on Bank Structure Competition

• - U.S. banking market deregulation the banking
  firm
• - Zarutskie does deregulation push banks to
  specialize in the lending market?
• - Brickley, Linck and Smith how do community
  banks respond to market entry by their
  correspondent banks?
• - U.S. banking market deregulation the borrower
  firm
• - Santos and Winton how do the power-plays
  between banks and borrowers get resolved?
• - Cetorelli does banking deregulation affect
  the nature of cohorts of borrower firms?

3
Zarutskie Competition Specialization

• - Does deregulation push banks to specialize in
  the lending markets?
• - evidence suggests that large banks specialize
  in hard-info real-estate loans whereas small
  banks specialize soft-info unsecured CI and
  personal loans.
• - comments/suggestions
• - discussion to clarify the impact of
  securitization on B/S-observed loan amounts and
  loan losses
• - lnTA lnTA2
• - what are the marginal effects of size? what
  are the economic significances?
• - community bank, mid-size bank, large
  bank indicator variables instead?
• - are members of a BHC treated as a single
  institution?
• - identification tests for the IV regressions
  and standard errors clustered at the bank-level
  (instead of state level).

4
Brickley, Linck Smith Bankers Banks

• - How do community banks respond to increased
  market competition and entry by their
  corresponding banks?
• - safeguarding proprietary information by
  creating/joining bank co-ops (bankers banks) in
  order to avoid sharing critical information on
  their borrowers.
• - comments/suggestions
• - an alternative to true, full-blown vertical
  integration
• - community banks approach has a precedent,
  even if histories differ credit unions and
  their corporate-CUs
• - other potential test variables
• - number of small establishments in the local
  market (from the Census Bureau)
• - number of small banks in a market using a
  correspondent bank (rssd9043)
• - amount of loans originated by small banks
  (rcon3431 available 1983-1993)
• - Any evidence from small- to large-bank
  switches in DealScan? If yes, under what terms?

5
Santos Winton Bank-Firm Power Plays

• - How do the power-plays between lenders and
  borrowers get resolved?
• - Tests of Diamond and Rajan (2000) hypothesis
  are robust after controlling for business cycle
  effects whereas tests of Boot, Greenbaum and
  Thakor (1993), Sharpe (1990) and Rajan (1992)
  hypothesis show that once business cycle effects
  are controlled for, bank capital matters even for
  firms with access to markets.
• - comments/suggestions
• - everything but the kitchen sink approach
  robust results
• - exploiting time-series/within-firm variation
  to know more about the dynamics
• - do low-CF/low-Cap borrowers switch to
  high-Cap banks when CF improves?
• - do high-Cap banks have difficulty renewing
  loans when their capital worsens?

6
Cetorelli Deregulation Nature of Firms

• - Do structural changes in the credit
  availability affect firms nature?
• - Post-deregulation cohorts of firms failure
  hazard is higher than that of pre- deregulation
  cohorts, pre-dereg firms do not necessarily adapt
  to their new environment lower availability of
  credit appears to imprint pre-dereg firms.
• - comments/suggestions
• - what is more predominant the managers or the
  corporate culture (i.e., policies)?
• - is it possible to keep track of managers? if
  yes, additional testable hypotheses
• - pre- vs. post-dereg firm frailty when
  managers change
• - frailty of post-dereg establishments
  acquired by pre-dereg establishments, or
  vice-versa
• - more details about the dataset would be
  welcome
• - plant closings vs. bankruptcies
• - what are the mechanisms? i.e., what are the
  implications for the capital structure choices
  and investment decisions?