| The regulatory structure and deposit insurance combine to constrain the banking industry and create dependency on the U.S. Government. The regulatory framework attempts to create homogenous operational and risk structures in banks. Using data from the Federal Deposit Insurance Corporation, the author creates a "risk class" construct based on three variables to has found different sub-groups within the banking industry and validated the statistical significance of the construct using MANOVA. The construct shows that there are differences between these sub-groups supporting the author's theory that within each sub-group, similar operational and risk structures will likely be found. It is also likely that similar cash flows will be found within these sub-groups. |
