Monograph examining trends, issues and the impact of financial policy regulation on savings banks (thrift associations) in the USA - discusses the current situation and the impact on costs and profitability, and outlines tax reform and regulatory alternatives. Graphs and references.

This study extends the of-balance sheet (OBS) banking literature to thrift OBS activities by empirically examining the motivation for thrift institutions to engage in various OBS activities, and to shed light on the risk-based capital requirement of thrift OBS activities. This is the first known study that addresses thrift OBS activities. A probit model is employed to test three hypotheses concerning the determinants of thrift OBS activities, namely, the regulatory tax hypothesis, the moral hazard hypothesis, and the market discipline hypothesis. In general, institutions engaging in off-balance sheet activities tend to be larger, better diversified, have higher capitalizations, hold a higher level of required reserves, and make a higher proportion of commercial and industrial loans. This study also found very strong support for market discipline hypothesis, weak support for regulatory tax hypothesis, and no support for moral hazard hypothesis.