Monetary and Fiscal Policy Options for Dealing with External Shocks: Insights from the Gimf for Colombia

by Daniel Leigh, Enrique Flores, Benedict J. Clements

We bring to bear a hand-collected dataset of executive turnovers in U.S. banks to test the efficacy of market discipline in a 'laboratory setting' by analyzing banks that are less likely to be subject to government support. Specifically, we focus on a new face of market discipline: stakeholders' ability to fire an executive. Using conditional logit regressions to examine the roles of debtholders, shareholders, and regulators in removing executives, we present novel evidence that executives are more likely to be dismissed if their bank is risky, incurs losses, cuts dividends, has a high charter value, and holds high levels of subordinated debt. We only find limited evidence that forced turnovers improve bank performance.

17 pages, ebook

First published November 30, 2005

About the author

Daniel Leigh is a pseudonym, a pen name. Though the name is fiction, the words written within are true; including the personal accounts. The preeminent purpose behind Daniel Leigh Books is to move the reader into a greater understanding of God, His ways, and His plans–thereby ushering in an increasing intimacy in their relationship with Him. Daniel Leigh is a cooperative effort of like-minded individuals who have set their heart to study, to practice and to teach God's word. Our desire is not for the limelight, but to witness the fullness of Life made manifest in each person who chooses to abide in the Word of Truth.