Geographic liberalization and the accessibility of banking services in rural areas

This study assesses the degree to which the liberalization of geographic banking restrictions has lived up to its promise of enhancing service accessibility in rural areas. The empirical framework is distinguished by a focus on changes in accessibility, as opposed to levels. While previous research has produced mixed results on the benefits of greater geographic powers for service accessibility in rural communities, the results reported here point unambiguously to a positive relationship between expansion opportunities and accessibility. Both OLS and ordinallevel probit regressions indicate that geographic banking liberalizations, particularly those leading to greater branching opportunities, have been associated with relatively strong growth in the number of banking offices serving rural areas.Rural areas ; Banks and banking

Taming the credit cycle by limiting high-risk lending

Reformers should review the loan-to-value guidelines for real estate lending, toughen them up where necessary and, most important, put the force of law behind them.Regulation ; Mortgage loans - Law and legislation ; Risk management ; Financial crises

Study of fluoride corrosion of nickel alloys

Report contains the results of an investigation of the corrosion resistance of nickel and nickel alloys exposed to fluorine, uranium hexafluoride, and volatile fission product fluorides at high temperatures. Survey of the unclassified literature on the subject is included

Financiers of the world, disunite

Diversity across banks and other financial firms promotes a resilient financial system because differing risk profiles reduce the likelihood of systemic crises caused by shared economic shocks. Consolidation and uniformity among banks and other financial intermediaries do the opposite. ; Yet some have suggested that any policy steps to reverse the financial system’s dramatic consolidation might yield little stability benefit because herd-like behavior among financial firms could still reduce diversity and mitigate any strengthening. If these firms moved in concert, the argument goes, they would make themselves susceptible to common shocks as if they had adopted a more consolidated structure. ; Countering this concern are indications that financial firms, when allowed to flourish, display stability-enhancing diversity. We find that hedge funds—despite a reputation for high-risk strategies and correlated behavior—recently have exhibited significant strategic dissimilarities, to the benefit of system stability.Financial risk management

Experiments shed new light on nickel-fluorine reactions

Isotopic tracer experiments and scale-impingement experiments show fluorine to be the migrating species through the nickel fluoride scale formed during the fluorination of nickel. This is in contrast to nickel oxide scales, where nickel is the migrating species

Auditing the auditors: oversight or overkill?

A growing number of high-profile companies have had to restate their earnings at substantially lower levels to correct the prior use of "aggressive" and even fraudulent accounting practices. Because the companies’ auditors approved the original reports, policymakers have questioned the capacity of public accounting firms to promote fair financial reporting. In response, recent legislation has instituted several reforms, including the creation of the Public Company Accounting Oversight Board, which together with the Securities and Exchange Commission will investigate alleged lapses in accounting practices. But how much oversight is really necessary? Jeffery Gunther and Robert Moore examine recent events in the light of research findings. Based on this analysis, they conclude that market forces have tended, over time, to shape the role of auditors to match or correspond to the needs of investors in monitoring individual companies’ performance. Despite current sentiment to the contrary, substantial government involvement in the business of auditing appears to be needed only when other types of government intervention, such as bank deposit insurance, have already disrupted market-based incentives for effective audits. In the more typical situation, both government and industry policymakers should avoid restrictive measures that unnecessarily increase audit costs, instead taking into account market forces’ successful track record in disciplining ineffective auditors and promoting an effective audit function.>Securities and Exchange Commission ; Accounting

Industry mix and lending environment variability: what does the average bank face

Diversification opportunities for banks may be greater today because of the lessening of geographic restrictions. In addition, regional economies have undergone vast transformations, with relatively volatile industries often assuming a diminished role. To assess whether these changes have resulted in a more stable lending environment, Jeff Gunther and Ken Robinson form industry portfolios for banks based on their presence in different states and the mix of economic activity found in those states. The authors find that the risk underlying banks' lending environments declined from 1985 to 1996 because of both a geographic restructuring of the banking system and increasing industrial diversification of state economies.Banks and banking ; Financial institutions

Has the housing boom increased mortgage risk?

Adjustable rate mortgages