Why the life insurance industry did not face an "S&L-type" crisis
In this article we explore possible explanations
for the divergence in behavior and performance
between these two classes of financial
institutions. First, we argue that in contrast to
commercial banks and LICs, S&Ls were dangerously
exposed to interest rate risk. As a result,
when nominal interest rates rose sharply in the
late 1970s, S&Ls experienced a larger decline in
the market value of their portfolios than did
LICs or banks.
