Can the Stock Harket Tell Bank Supervisors Anything They Don't Already Know? - Brief Article

Economic & Financial Review, April, 2001 by Jeffery W. Gunther, Mark E. Levonian, Robert R. Moore

(4) The sole 5-rated observation is not shown to preserve the data's confidentiality.

(5) These results are based on the degree of association within the estimation sample. We have insufficient data to assess how well the various models forecast events outside the estimation sample.

(6) When all the variables shown in Table 3 are included in the downgrade regressions, whether they are significant or not, the reductions in association resulting from the exclusion of EDF are 8 percent and 4 percent, respectively.

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Jeffery W. Gunther is a senior economist and research officer and Robert R. Moore a senior economist and policy advisor in the Financial Industry Studies Department of the Federal Reserve Bank of Dallas. Mark E. Levonian is a vice president in the Banking Supervision and Regulation Division of the Federal Reserve Bank of San Francisco.