We develop a model of the market for federal funds that explicitly accounts for its two distinctive features: banks have to search for a suitable counterparty, and once they have met, both parties negotiate the size of the loan and the repayment. The theory is used to answer a number of positive...

Remarks at Queens Chamber of Commerce and Queens Economic Development Corporation, Flushing, New York City.

Remarks at Fordham Wall Street Council, Fordham University Graduate School of Business, New York City.

Following the investment-cash flow literature, we test whether bank lending is constrained by the availability of insured deposits--a necessary condition for the existence of bank lending channel of monetary policy. We treat insured deposits as a type of "internal fund," similar to cash flows....

Do banks play a special role in the transmission mechanism of monetary policy? I use the presence of internal capital markets in bank holding companies to isolate plausibly exogenous variation in the financial constraints faced by subsidiary banks. In particular, I demonstrate that affiliated...

Building on recent evidence concerning the functioning of internal capital markets in financial conglomerates, we conduct a novel test of the balance-sheet channel of monetary policy. Specifically, we investigate how the response of lending to monetary policy differs across small banks that are...

Remarks before the Bronx Chamber of Commerce at the New York Botanical Garden, Bronx, New York.