The Effects of Bank Charter Switching on Supervisory Ratings

64 Pages Posted: 23 Mar 2014

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: March 5, 2014

Abstract

I study whether commercial banks can improve their supervisory ratings by switching charters. I use the fees charged by chartering authorities to establish a causal effect from switching on ratings. Banks receive more favorable ratings after they change charters, an effect that is large for both national and state charters. In addition, controlling for bank ratings, banks that switch charters fail more often than others. These results suggest that banks can arbitrage ratings by switching charters and are consistent with 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 (March 5, 2014). FEDS Working Paper No. 2014-20, Available at SSRN: https://ssrn.com/abstract=2412748 or http://dx.doi.org/10.2139/ssrn.2412748

Marcelo Rezende (Contact Author)

Board of Governors of the Federal Reserve System ( email )

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Washington, DC 20551
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