This paper infers market information embedded in the price and quantity of S&L deposits. While previous empirical research typically treats the risk premium as the key element of deposit interest spread, subsidy-shifting theory suggests that deposit rates also contain a subsidy-shifting premium that arises from an institution’s eagerness to fund loan and investment opportunities that extract deposit-insurance subsidies. This paper examines the existence and the nature of both premiums and shows how regulators can use this information to make regulatory oversight more effective.

This paper develops an optimal resolution triage strategy for a deposit-insurance regulator. The regulator seeks to maximize the market value of the deposit insurance enterprise, subject to budget, personal, bureaucratic, political, informational and legal restraints. Testable hypotheses are derived concerning the timing of insolvency resolutions. The paper tests these hypotheses using a two-step hazards model and a data set of thrift resolutions during 1985–1989. The tests focus on the relative roles of value maximization and constraint pressures in decisions to grant capital forbearance. The results suggest that regulators seldom conformed to the benchmark resolution-timing strategy that an “unconflicted” agent would follow under only a budget constraint. Instead, the evidence shows that the resolution timing decision was distorted by personal, political, informational, and legal constraints.

The overwhelming majority of Chinese firms that list their stock both in China and abroad had gone public, and listed, abroad first. We find that when companies listed abroad return to China to issue stock and list, they experience poorer post-issuance stock and operating performance in comparison to purely domestic issuers. Also, they raise more funds relative to their sales, leave less money on the table for investors, and incur lower direct flotation costs. Among returning firms, those which raise higher proceeds relative to sales experience poorer long-run stock performance and lower Tobin’s q post issuance. Our results offer a new perspective on cross-listing, which we term ‘dressing-up-for-premium’. Firms from less-developed markets take advantage of the enhanced visibility and prestige associated with the foreign listing to issue shares domestically at inflated prices and favorable terms, and to raise greater proceeds than they can efficiently use.