NDLI: The value of tax benefits and the cost of liquidating versus selling failed thrift institutions

Content Provider	Springer Nature Link
Author	Barth, James R. Bartholomew, Philip F. Elmer, Peter J.
Copyright Year	1997
Abstract	This paper examines the 205 insolvent thrifts that were resolved in 1988 and assesses the cost savings obtained by selling 179 of the institutions through assisted acquisitions rather than liquidating them. It is hypothesized that the cost savings were determined by factors related both to the future viability of the acquired institution and the particulars of the deal arranged by the Federal Home Loan Bank Board and the Federal Savings and Loan Insurance Corporation. The added value by selling a thrift is determined primarily by the level of core deposits obtained by the acquired thrift. However, the branch structure and purchased mortgage-servicing rights should also add franchise value to the firm. In addition to these factors, the analysis accounts for the tax benefits and other regulator forbearances associated with the deals. Other characteristics of the deals are also considered. It is found that core deposits, tax benefits, purchased mortgage-servicing rights, average branch size, and type of acquirer, as well as some other factors, were significant determinants of the cost savings obtained through selling an institution rather than liquidating it.
Starting Page	3
Ending Page	11
Page Count	9
File Format	PDF
ISSN	10550925
Journal	Journal of Economics and Finance
Volume Number	21
Issue Number	2
e-ISSN	19389744
Language	English
Publisher	Springer US
Publisher Date	1997-01-01
Publisher Place	Boston
Access Restriction	One Nation One Subscription (ONOS)
Subject Keyword	Economics general Financial Economics Finance /Banking
Content Type	Text
Resource Type	Article
Subject	Finance Economics and Econometrics

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