Banking and finance

 

• 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.

  November 28, 2023

• Surveys

  Banking Conditions Survey

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

  November 13, 2023

• 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.

  October 10, 2023

• Surveys

  Banking Conditions Survey

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

  October 02, 2023

• Bankers, regulators absorb lessons of Silicon Valley Bank failure as new tests emerge

  Ben Munyan, director of supervisory policy in the Banking Supervision Department at the Federal Reserve Bank of Dallas, discusses the challenges the banking industry faces in an era of rapidly rising interest rates and how Texas institutions have fared.

  September 29, 2023

• Mexican peso strength noteworthy among emerging markets during Fed tightening

  Many emerging-market currencies have depreciated modestly during the Federal Reserve’s tightening cycle that began in March 2022. The Mexican peso, however, outperformed the group during the period.

  September 26, 2023

• Research Department Working Papers

  High-Yield Debt Covenants and Their Real Effects

  Contrary to the prevailing belief that incurrence covenants offer limited protection for creditors, this paper reveals a significant and sudden decline in investment upon triggering these covenants.

  August 22, 2023

• Policy impact of unexpected Fed rate movements blurred by key information cues

  Unexpected Federal Reserve monetary policy moves can profoundly affect market participants, investors and the economy. The impact of policy stems not only from its direct effects—the traditional focus for economists—but also from the new information revealed about the Fed’s economic outlook.

  August 22, 2023

• Surveys

  Banking Conditions Survey

  Loan demand declined for the eighth period in a row, though the rate of decline eased somewhat.

  August 21, 2023

• Location, location, location: Mortgage rate impact varies by metro

  The role of individual housing markets and their sensitivity to mortgage rate changes play an important part in understanding the impact of higher rates.

  August 15, 2023