A CASE-STUDY OF ORGANIZATIONAL FORM AND RISK SHIFTING IN THE SAVINGS-AND-LOAN INDUSTRY

I analyze the investment and funding strategies of two thrifts, one st ock owned and one mutually owned, from 1983 to 1988, Despite their sim ilarities prior to 1983, the stock thrift implemented a riskier financ ial strategy and did so only after converting to stock ownership, Alth ough this strategy ultimately led to its failure, the stock thrift sti ll made significant payouts to its controlling shareholders, This case study illustrates in stark terms the relation between organizational form and risk shifting in the thrift industry.