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PENN SQUARE, PROBLEM LOANS, AND INSOLVENCY RISK
Author(s) -
Lamy Robert E.,
Thompson G. Rodney
Publication year - 1986
Publication title -
journal of financial research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.319
H-Index - 49
eISSN - 1475-6803
pISSN - 0270-2592
DOI - 10.1111/j.1475-6803.1986.tb00440.x
Subject(s) - insolvency , bank failure , square (algebra) , national bank , stock (firearms) , financial system , economics , stock price , bank rate , business , banking industry , actuarial science , finance , monetary economics , central bank , monetary policy , engineering , mathematics , mechanical engineering , paleontology , geometry , series (stratigraphy) , biology
This paper investigates the influence of the failure of Penn Square Bank of Oklahoma City on stock prices within the banking industry. This influence is compared to the results of previous studies of the failures of Franklin National Bank of New York and United States National Bank of San Diego. While each of these earlier studies finds only a transitory impact on bank securities, this paper finds evidence of a structural change in the pricing mechanism for bank stocks after the Penn Square failure.