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Banking and finance

 

  • Globalization Institute Working Paper

    Optimal Bailouts in Banking and Sovereign Crises

    This paper finds that larger bailouts relax financial frictions and increase output but increase fiscal needs and default risk.

  • Surveys

    Banking Conditions Survey

    Loan volumes remained stable, with near-equal shares of bankers reporting an increase over the past six weeks as those reporting a decrease.

  • U.S. 30-year mortgage predominance doesn’t seem to delay impact of Fed rate hikes

    After comparing economic data of the U.S. and other major advanced economies, we find tentative evidence that the slow adjustment of the outstanding mortgage rate in the U.S. has not played an important role in delaying the intended effects of the monetary tightening.

  • Arbitrage limits heighten dollar shortages abroad during volatile times

    U.S. dollars are hard to find in foreign markets during times of heightened risk, as evidenced by two interesting and related features in the post-2007 international financial landscape.

  • Surveys

    Banking Conditions Survey

    Credit standards tightened at a slower pace across all loan types. Loan demand continued to decline, though at the slowest pace since the end of 2022.

  • State and local governments rake in surpluses after pandemic

    The existence of large sums in state and local government coffers runs counter to historic post-recession trends. State and local governments usually grapple with budget shortfalls due to rising social program demands and weak revenue streams following recessions.

  • Reciprocal deposit networks provide means to exceed FDIC’s $250,000 account cap

    Because of their prominence, reciprocal deposits are important in the broader discussion of deposit insurance. Though they have the potential to increase banks’ moral hazard, they also bring increased trust and safety to the banking system.

  • Surveys

    Banking Conditions Survey

    Credit standards continued to tighten, and loan pricing continued to rise at an above-average pace this period.

  • Research Department Working Papers

    Deposit Convexity, Monetary Policy and Financial Stability

    Banks and researchers conventionally model the response of deposit interest rates to market interest rates as constant, implying that deposits have nearly constant duration. Contrary to this standard assumption, this paper shows empirically that the “beta” of deposit rates to market rates increases as market rates rise, causing the duration of deposits to fall.

  • Surveys

    Banking Conditions Survey

    Loan demand has been declining for a year, and the pace accelerated this period.