We consider the business strategy of some banks that provide relationship loans (where they have loan origination and monitoring advantages relative to capital markets) with core deposit funding (where they can pass along the benefit of a sticky price on deposits). These quot;traditional...

Small businesses rely on banks for credit more than large businesses do. As a result, small business may be more adversely affected when adverse shocks, such as reduced bank capital or higher interest rates, reduce the supply of bank loans. We use annual, state-level data for 1990-2000 to...

Because illiquid bonds may be relatively poorly priced, the ability to infer investor perceptions of changes in a banking organization's financial health from such bonds may be obscured. To examine the time-series effect of trading frequency on subordinated debt spreads, we consider the...

We find that the risk-sensitivity of bank holding company subordinated debt spreads at issuance increased with regulatory reforms that were designed to reduce conjectural government guarantees, but declined somewhat with subsequent reforms that were aimed in part at reducing regulatory...

A paper presented at the October 2003 conference quot;Beyond Pillar 3 in International Banking Regulation: Disclosure and Market Discipline of Financial Firms,quot; cosponsored by the Federal Reserve Bank of New York and the Jerome A. Chazen Institute of International Business at Columbia...

We investigated whether in recent years banks have increased their holdings of securities at the expense of their holdings of business loans in response to short-falls of their capital relative to risk-weighted capital standards and relative to a capital standard that made no explicit allowance...

We conduct an empirical analysis of the Federal Reserve's large-scale asset purchases (LSAPs) on MBS yields and mortgage rates. The Federal Reserve's accumulation of MBS and Treasury securities lowered MBS yields and mortgage rates by more than what would have been suggested by changes in market...

This paper considers the role of Federal Home Loan Bank (FHLB) advances in stabilizing their commercial bank members' residential mortgage lending activities. Our theoretical model shows that using mortgage-related membership criteria or requiring mortgage-related collateral does not ensure that...

This Note describes how risks arising from climate change may affect financial stability. We describe how climate-change related risks may emerge either as shocks to the financial system or as financial system vulnerabilities that could amplify the effects of these or other shocks

This paper demonstrates that the risk sensitivity of a banking organization's subordinated debt yield spreads may understate the potential for market discipline in some periods and overstate in others because such spreads contain liquidity premiums that are driven, in part, by the...