Abstract
We provide evidence on two noncompeting hypotheses concerning risk in the savings and loan industry: (1) the ownership structure hypothesis which argues that stock associations operate with more risk than mutual associations, and (2) the deregulation hypothesis which argues that savings and loans take more risk in a deregulated environment. Evidence from data on individual savings and loans for the 1976–1986 period is consistent with both hypotheses. Savings and loan associations took more risk because of the demutualization of the industry and also took more risk because regulations permitted greater risk-taking. Our results thus suggest that the thrift crisis may have reflected a unique confluence of structural and regulatory events.
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