income gap. Secondly, we show that income gap also predicts the sensitivity of bank lending to interest rates. Quantitatively …, a 100 basis point increase in the Fed funds rate leads a bank at the 75th percentile of the income gap distribution to … increase lending by about 1.6 percentage points annually relative to a bank at the 25th percentile …

When a bank experiences a negative shock to its equity, one way to return to target leverage is to sell assets. If … asset sales occur at depressed prices, then one bank's sales may impact other banks with common exposures, resulting in … explains how the distribution of bank leverage and risk exposures contributes to a form of systemic risk. We compute bank …