Thrift Size, Risk‐Taking and Return Performance

Abstract

Return and risk performance of US thrift institutions during the period 1986–90 was inversely related to both firm size and the extent to which the thrifts engaged in non‐traditional activities. Our results contrast earlier studies which found economies of scale in the thrift industry. Most of these earlier studies were based on testing periods prior to the deregulatory activity in the early 1980's. The central question addressed in this paper is whether and how this deregulatory activity might have caused an industry which previously experienced economies of scale to experience performance inversely related to firm size. Our results suggest that at least part of this inverse relationship between size and performance is explained by self‐ serving managerial behavior.

Citation

Knopf, J.D. and Teall, J.L. (1997), "Thrift Size, Risk‐Taking and Return Performance", Managerial Finance, Vol. 23 No. 2, pp. 78-92. https://doi.org/10.1108/eb018610