The Effects of Bank Charter Switching on Supervisory Ratings

78 Pages Posted: 13 Sep 2011 Last revised: 19 Dec 2016

See all articles by Marcelo Rezende

Marcelo Rezende

Board of Governors of the Federal Reserve System

Multiple version iconThere are 2 versions of this paper

Date Written: November 25, 2016

Abstract

I study whether commercial banks can improve their supervisory ratings by switching charters. I use the distance between banks' headquarters and chartering authorities' offices to establish a causal effect from switching on ratings. Banks receive better ratings when they switch from national to state charters, and keep their ratings about unchanged when they switch from state to national charters. These results suggest that banks can arbitrage ratings by switching charters and are consistent with some regulators competing for banks by rating incoming banks better than similar banks that they already supervise.

Keywords: Bank Charter, Bank Regulator, Banking Supervision, Ratings

JEL Classification: G21, G28

Suggested Citation

Rezende, Marcelo, The Effects of Bank Charter Switching on Supervisory Ratings (November 25, 2016). AFA 2013 San Diego Meetings Paper; Midwest Finance Association 2012 Annual Meetings Paper. Available at SSRN: https://ssrn.com/abstract=1926324 or http://dx.doi.org/10.2139/ssrn.1926324

Marcelo Rezende (Contact Author)

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

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