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Working Paper
Measuring the Implementation of the FSB Key Attributes of Effective Resolution Regimes for Financial Institutions in the European Union
There are lingering concerns about the health of European banks and extensive market commentary about whether post-crisis regulatory reforms in Europe have adequately addressed these concerns. In June 2012, European policymakers released the broad outlines of a proposal for a "European banking union" to strengthen the banking sector and help assuage concerns of investors and depositors, however, uncertainty remains regarding how the new EU bank resolution regime, the Bank Recovery and Resolution Directive (BRRD), will work in practice. This paper addresses whether the BRRD has fulfilled the ...
Journal Article
Profits and balance sheet developments at U.S. commercial banks in 2008
Reviews recent developments in the balance sheets and in the profitability of U.S. commercial banks. The article discusses how developments in the U.S. banking industry in 2008 and early 2009 were related to changes in financial markets and in the broader economy.
Journal Article
How do banks make money? a variety of business strategies
In the second of two articles, the authors show that the business strategy chosen by a commercial banking company can have a substantial impact on its risk-return profile. Their analysis suggests that a wide variety of business strategies are likely to be financially viable in the future but, echoing concerns of others, they conclude that very small banking companies will face financial challenges regardless of the business strategy they select
Report
Liquidity risk and U.S. bank lending at home and abroad
While the balance sheet structure of U.S. banks influences how they respond to liquidity risks, the mechanisms for the effects on and consequences for lending vary widely across banks. We demonstrate fundamental differences across banks without foreign affiliates versus those with foreign affiliates. Among the nonglobal banks (those without a foreign affiliate), cross-sectional differences in response to liquidity risk depend on the banks? shares of core deposit funding. By contrast, differences across global banks (those with foreign affiliates) are associated with ex ante liquidity ...
Working Paper
Do Small Businesses Still Prefer Community Banks?
We formulate and test hypotheses about the role of bank type ? small versus large, single-market versus multimarket, and local versus nonlocal banks ? in banking relationships. The conventional paradigm suggests that "community banks" ? small, single market, local institutions ? are better able to form strong relationships with informationally opaque small businesses, while "megabanks" ? large, multimarket, nonlocal institutions ? tend to serve more transparent firms. Using the 2003 Survey of Small Business Finance (SSBF), we conduct two sets of tests. First, we test for the type of bank ...
Newsletter
Federal preemption of state bank regulation: a conference panel summary
The Chicago Fed's 42nd Annual Conference on Bank Structure and Competition, which took place May 17?19, 2006, included a panel on federal preemption of state banking regulation. The panelists discussed the wide-ranging impact of rules issued by the Office of the Comptroller of the Currency, the federal agency that regulates national banks.
Working Paper
Does credit supply affect small-firm finance?
States were granted authority to limit interstate branching following passage of Federal legislation in 1994, relaxing restrictions on geographical expansion by banks. We show that differences in state?s branching restrictions affect credit supply. In states more open to branching, small firms borrow at interest rates 25 to 45 basis points lower than firms operating in less open states. Firms in open states also are more likely to borrow from banks. Despite this evidence that interstate branch openness expands credit supply, we find no effect of variation in state restrictions on branching on ...
Discussion Paper
How Do Liquidity Conditions Affect U.S. Bank Lending?
The recent financial crisis underscored the importance of understanding how liquidity conditions for banks (or other financial institutions) influence the banks' lending to domestic and foreign customers.
Journal Article
The importance of payments-driven revenues to franchise value and in estimating bank performance
This paper examines how the production of payment services impacts the franchise value of banks. It also explores whether analysis are incorrectly measuring the performance of the banking sector and failing to realize the full importance of payments-driven revenues to banks. In initial empirical analysis, we find limited evidence to suggest that higher payments-driven revenues are associated with higher franchise value. We find, also, that estimates of productive efficiency change dramatically for a small number of banks heavily involved in payments services. We find evidence to suggest that ...