assets and lending allocations fall to 22 percent. Banks with low risk tolerance or less access to liquidity are particularly …This paper empirically investigates banks’ investment allocations over the recent business cycle. I identify … the pre-recession period, banks lend 38 percent of incremental deposits; however, during the downturn, banks favor liquid …

This paper investigates the incentives for banks to bias their internally generated risk estimates. We are able to … estimate bank biases at the credit level by comparing bank-generated risk estimates within loan syndicates. The biases are … credits. In addition, we find that low-capital banks’ risk estimates have less explanatory power than those of high …

--in particular, balance sheet constraints and counterparty credit risk. The empirical evidence supports the Fed's views on the … primacy of balance sheet constraints in the earlier stages of the crisis and the increased prominence of counterparty credit … risk as the crisis evolved in 2008. I conclude that an understanding of the prevailing risk environment is necessary in …

an average loss given default of 35.2 percent, this lower default risk implies reduced credit losses of 134 basis points …This paper analyzes the relationship between changes in borrowers' monthly mortgage payments and future credit … Program (HARP). We use a competing risk model to estimate the sensitivity of default risk to downward adjustments of borrowers …

real projects that receive funding and, hence, the supply of credit. Monetary policy affects risk appetite by changing the …The macro risk premium measures the threshold return for real activity that receives funding from savers. We base our … argument in this paper on the relationship between the macro risk premium and the growth of financial intermediaries' balance …