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Full-Text Articles in Social and Behavioral Sciences
Stock Banks And Mutual Banks, Eric Bennett Rasmusen
Stock Banks And Mutual Banks, Eric Bennett Rasmusen
Eric Bennett Rasmusen
Because mutual banks do not allow shareholders to discipline bad managers and so have higher costs, they have been disappearing since bank entry deregulation in the 1980's. They were common before regulation in the 1930's, and are more common in the 19th century. I propose that this is because of the absence of deposit insurance. Depositors wanted safety more than low operating costs, and a mutual manager, in a cushy job he could not lose except by bankrupting his firm, would also value safety.
Entry For Buyout, Eric Bennett Rasmusen
Entry For Buyout, Eric Bennett Rasmusen
Eric Bennett Rasmusen
Entry into a monopolized industry may be profitable if the entrant is bought out even if it would be unprofitable to enter for continuing operation. The stronger is duopoly competition, the greater is the incentive for buyout, so an incumbent's toughness in produce-market competition may be his own undoing. Evidence from the 1890's shows examples of entry for buyout.