Date of Award


Degree Type


Degree Name


Degree Program

Financial Economics


Economics and Finance

Major Professor

Hassan, Mohammed K.

Second Advisor

Altazan, John

Third Advisor

Varela, Oscar

Fourth Advisor

Naka, Atsuyuki

Fifth Advisor

Gleason, Katherine


This study employs the logistic diffusion model of financial innovations. In order to trace the determinants of OBS guarantees we consider that OBS guarantees in the banking industry as a financial innovation follows a time diffusion trend. In addition to the time trend factor we include a regulation pressure factor to test the bank regulatory hypothesis and non-regulatory bank-specific factors to test the market discipline hypothesis. We also include macroeconomic factors to test for the general economic notion impact on U.S. banks' OBS guarantees. The results reject the regulatory tax hypothesis and conclude that regulations have no major impact in determining banks OBS guarantees usage. Another major result is that banks OBS guarantees are decreasing over time and it is no longer considered as a financial innovation in the U.S. banking industry; banks seem to have replaced guarantees with other OBS activities like derivatives. While the banks' regulatory factor is not a major determinant of OBS guarantees, bank's nonregulatory and macroeconomic factors are significant in determining OBS usage


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