¹ Since deposits constitute a considerable percentage of bank resources, and the term capital structure has been used in the literature to define the combination of owners equity and long-term debt in industrial and mercantile firms, it is more appropriate to use the term fund structure for the banks as a substitute for the term capital structure.

² Modigliani, Franco and Miller, Merton, “The Cost of Capital Corporation Finance and The Theory of Investment,” American Economic Review (June 1958) pp. 261–297.Google Scholar

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⁴ By “the same degree of government regulation,” it is meant the extent of supervision by the F.R. System and other regulatory agencies as to safety and reserves requirements. The paper does not consider the matters of branchings and impact on competitiveness, or the variety of regulations governing states versus national banks.

⁵ The banks were classified into the three categories based on the general knowledge of bankers.

⁶ Modigliani and Miller, J“The Cost of Capital,” p. 261–97.

⁷ Barges, Alexander, The Effect of Capital Structure on the Cost of Capital (Englewood Cliffs, New Jersey: Prentice-Hall, Inc., 1963). p. 22.Google Scholar

⁸ R. Wippern, “Financial Structure,” p. 619. Wippern included dividends on preferred stock in the numerator of the ratio.

⁹ Other possible and equally acceptable measurements would have been the dividend yield on either book or market value. To keep the scope of this study within manageable proportions, it was decided to restrict the measurements of the dependent variable to these two estimators.

¹⁰ Benishay, Haskel, “Variability in Earnings-Price Ratios of Corporate Equities,” American Economic Review (March 1961). pp. 81–94.Google Scholar

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¹² Durand, David, “Bank Stocks and the Analysis of Covariance,” Econometrica, (January 1955), pp. 30–45.CrossRefGoogle Scholar