This paper proposes an analytic framework for the reliability assessment of the automated payments systems used by the Federal Reserve Banks. The failure/recovery behavior of the system currently in operation is modeled as a continuous-time Markov process with varying levels of detail, and the...

In this paper we empirically test whether the Small Business Administration’s main guaranteed lending program—the 7(a) program—has a greater impact on economic performance in low-income markets than in others. This hypothesis is predicated on our previous research (Craig, Jackson, and...

Regulatory agencies are unwilling or unable to close thrift institutions immediately upon insolvency. Instead, they have progressively reduced the thrift capital requirement, refrained from enforcing that requirement, and allowed thrifts to hold more nonmortgage loans in the hope that the...

An examination of the role of foreign banks in the loan sales market, finding that the motives for loan sales and purchases differ between U.S. and foreign-owned banks and between foreign banks of different regions, which is consistent with foreign banks' using the market for diversification.

A documentation of some recent changes in the market for loan sales, using a tobit model to relate quantities of loans bought and sold to bank size, capital, risk, and funding mode.

This paper examines two proposals to correct the risk-taking incentives embedded in the current deposit insurance system and to provide protection to the deposit insurance fund. the first would require banks to issue subordinated debt, and the second would require bank stockholders to post...

A study that models the regulatory decision to close a bank as a call option. A two-equation model of bank failure that treats closings as regulatorily timed events is compared with two single-equation models for accuracy.

The Gramm-Leach-Bliley Act of 1999 extended the lending authority of Federal Home Loan Banks to include advances secured by small-enterprise loans of community financial institutions. The authors examine three possible reasons for the extension of this selective credit subsidy to community banks...

A study that concludes recorded security price errors are potential sources of misspecification in joint tests of the capital asset pricing model and market efficiency.

The authors examine whether credit-spread curves, engendered by a mandatory subordinated-debt requirement for banks, would help predict bank risk. They extract the credit-spread curves each quarter for each bank in our sample, and analyze the information content of credit-spread slopes. They...