Document Type

Article

Journal/Book Title/Conference

Economics Research Institute Study Paper

Volume

4

Publisher

Utah State University Department of Economics

Publication Date

1999

Rights

Copyright for this work is held by the author. Transmission or reproduction of materials protected by copyright beyond that allowed by fair use requires the written permission of the copyright owners. Works not in the public domain cannot be commercially exploited without permission of the copyright owner. Responsibility for any use rests exclusively with the user. For more information contact the Institutional Repository Librarian at digitalcommons@usu.edu.

First Page

1

Last Page

48

Abstract

We empirically examine interest rates established on the national market for insured thrift deposits during a period spanning passage of the Financial Institutions Reform, Recovery and Enhancement Act of 1989. Our analysis indicates that changes in the demand for funds by thrifts in periods of financial stress exerted a pronounced influence on the deposit rate premiums paid by thrifts over comparable Treasuries. This contrasts with the conventional wisdom that default risk is the primary systematic determinant of rate premiums.

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