Publication Date

1-1-1989

Document Type

Dissertation/Thesis

First Advisor

Newman, Joseph A.

Degree Name

B.S. (Bachelor of Science)

Department

Department of Finance

Abstract

My thesis focuses on the agency theory, but more specifically on the effect of employee ownership in banking. The agency theory states that top management is less willing to take large risks if they own stock in the company. My thesis looks at banks that employ Employee Stock Ownership Programs (ESOPs) and compares them with banks without ESOPs. In my thesis, I measure the amount of risk that banks take with 2 specific financial ratios. The equity ratio measures the amount of risk taken with respect to the bank's capital. The Loan-to-Deposit ratio measures risk with respect to loans as a percentage of deposits. My thesis also included statistical tests to find the confidence interval of the results and the correlation between the 2 risk measures. I found that there is a high correlation between the two measures in ESOP banks. I also found that ESOP banks tend to be more risk averse when dealing in capital, as opposed to the risk taken in the amount of their loans as a percentage of deposits.

Extent

5 pages

Language

eng

Publisher

Northern Illinois University

Rights Statement

In Copyright

Rights Statement 2

NIU theses are protected by copyright. They may be viewed from Huskie Commons for any purpose, but reproduction or distribution in any format is prohibited without the written permission of the authors.

Media Type

Text

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