Derivatives Activity at Troubled Banks

Derivatives have become an essential instrument for hedging risks, yet moral hazard can lead to their misuse by problem banks. Given that the absence of comprehensive data on bank derivatives activities prevents an accurate assessment of bank risk-taking, banks have an opportunity to take unmonitored second bets. Thus , troubled banks have the motive to increase risk, and derivatives provide the means to do so. The role of bank supervisors should be to limit the opportunity through more comprehensive data reporting requirements and closer supervisory scrutiny of derivatives activity at problem banks. Because a relatively large number of banks active in the derivatives market have low capital ratios and are considered institutions with a significant risk of failure by bank supervisors, the possible misuse of derivatives by troubled banks should be of concern to regulators. However, we find no evidence that the volume of derivatives activity at troubled banks affects the probability of formal regulatory intervention or even a downgrade in supervisory rating. This paper was presented at the Financial Institutions Center's October 1996 conference on "

Determinants of the Japan Premium: Actions Speak Louder Than Words

Since August 1995, Japanese banks have had to pay a premium on Eurodollar and Euroyen interbank loans relative to their U.S. and U.K. competitors. This so-called Japan premium' provides a market indicator of investor anxiety about the ability of Japanese banks to repay loans. We examine the determinants of the Japan premium and find that government announcements not associated with concrete actions had little impact. On the other hand, announcements of concrete actions by the Japanese government, such as injections of funds into the banking system, tended to have an effect on the size of the Japan premium.

Crunching the recovery: bank capital and the role of bank credit

New England ; Bank supervision ; Bank capital ; Bank loans

Bank lending and the transmission of monetary policy

Bank loans ; Monetary policy - United States ; New England ; Econometric models ; Bank capital

Unnatural Selection: Perverse Incentives and the Misallocation of Credit in Japan

This study examines the misallocation of credit in Japan associated with the perverse incentives of banks to provide additional credit to the weakest firms. Firms are far more likely to receive additional credit if they are in poor financial condition, and these firms continue to perform poorly after receiving additional bank financing. Troubled Japanese banks allocate credit to severely impaired borrowers primarily to avoid the realization of losses on their own balance sheets. This problem is compounded by extensive corporate affiliations, which provide a further incentive for banks to allocate scarce credit based on considerations other than prudent credit risk analysis.

Physical Properties of Complex C Halo Clouds

Observations from the Galactic Arecibo L-Band Feed Array HI (GALFA-HI) Survey of the tail of Complex C are presented and the halo clouds associated with this complex cataloged. The properties of the Complex C clouds are compared to clouds cataloged at the tail of the Magellanic Stream to provide insight into the origin and destruction mechanism of Complex C. Magellanic Stream and Complex C clouds show similarities in their mass distributions (slope = -0.7 and -0.6, respectively) and have a common linewidth of 20 - 30 km/s (indicative of a warm component), which may indicate a common origin and/or physical process breaking down the clouds. The clouds cataloged at the tail of Complex C extend over a mass range of 10^1.1 to 10^4.8 solar masses, sizes of 10^1.2 to 10^2.6 pc, and have a median volume density of 0.065 cm^(-3) and median pressure of (P/k) = 580 K cm^{-3}. We do not see a prominent two-phase structure in Complex C, possibly due to its low metallicity and inefficient cooling compared to other halo clouds. From assuming the Complex C clouds are in pressure equilibrium with a hot halo medium, we find a median halo density of 5.8 x 10^(-4) cm^(-3), which given a constant distance of 10 kpc, is at a z-height of ~3 kpc. Using the same argument for the Stream results in a median halo density of 8.4 x 10^(-5) x (60kpc/d) cm^(-3). These densities are consistent with previous observational constraints and cosmological simulations. We also assess the derived cloud and halo properties with three dimensional grid simulations of halo HI clouds and find the temperature is generally consistent within a factor of 1.5 and the volume densities, pressures and halo densities are consistent within a factor of 3.Comment: Accepted for publication in AJ. 54 pages, including 6 tables and 16 figure

Ancient Greek I

In this elementary textbook, Philip S. Peek draws on his twenty-five years of teaching experience to present the ancient Greek language in an imaginative and accessible way that promotes creativity, deep learning, and diversity. The course is built on three pillars: memory, analysis, and logic. Readers memorize the top 250 most frequently occurring ancient Greek words, the essential word endings, the eight parts of speech, and the grammatical concepts they will most frequently encounter when reading authentic ancient texts. Analysis and logic exercises enable the translation and parsing of genuine ancient Greek sentences, with compelling reading selections in English and in Greek offering starting points for contemplation, debate, and reflection. A series of embedded Learning Tips help teachers and students to think in practical and imaginative ways about how they learn. This combination of memory-based learning and concept- and skill-based learning gradually builds the confidence of the reader, teaching them how to learn by guiding them from a familiarity with the basics to proficiency in reading this beautiful language. Ancient Greek I: A 21st-Century Approach is written for high-school and university students, but is an instructive and rewarding text for anyone who wishes to learn ancient Greek