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Working Paper
Gender and Professional Networks on Bank Boards
Owen, Ann L.; Temesvary, Judit; Wei, Andrew (2021-08-23)
Women are underrepresented on bank boards. Using a newly compiled dataset of bank board membership over the 1999-2018 period, we find that within-board professional networks are extensive, but female board members are significantly less connected than male directors, both in number and length of connections. We also find that professional networks play an important role in determining the appointment of bank board directors. Connections also positively impact compensation for female directors, especially connections to other women. These results suggest that there are differences in the ...
Finance and Economics Discussion Series , Paper 2021-021r1

Working Paper
Sectoral Loan Concentration and Bank Performance (2001-2014)
Regehr, Kristen; Sengupta, Rajdeep (2016-11-01)
Sectoral loan concentration is an important factor in bank performance. We develop a measure of sectoral loan concentration and study how community bank performance and the size-performance relationship vary with loan concentration and changes in loan concentration. The size-profitability relationship varies with concentration in the residential real-estate (RRE) sector. Higher RRE concentration is associated with lower returns especially for larger community banks?banks with assets totaling a billion or more. Concentration in other sectors, such as agriculture and commercial real estate ...
Research Working Paper , Paper RWP 16-13

Working Paper
Causal Impact of Risk Oversight Functions on Bank Risk: Evidence from a Natural Experiment
Daniel, Naveen; Naveen, Lalitha; Haubrich, Joseph G.; Balasubramanyan, Lakshmi (2019-01-10)
Our goal is to document the causal impact of having a board-level risk committee (RC) and a management-level executive designated as chief risk officer (CRO) on bank risk. The Dodd Frank Act requires bank holding companies with over $10 billion of assets to have an RC, while those with over $50 billion of assets are additionally required to have a CRO to oversee risk management. The innovation that allows us to document a causal impact is our research design. First, we use the passage of the Dodd Frank Act as a natural experiment that forced noncompliant firms to adopt an RC and appoint a ...
Working Papers , Paper 19-01

Journal Article
Cash holdings and bank compensation
Mehran, Hamid; Acharya, Viral V.; Sundaram, Rangarajan K. (2016-08)
The experience of the 2007-09 financial crisis has prompted much consideration of the link between the structure of compensation in financial firms and excessive risk taking by their employees. A key concern has been that compensation design rewards managers for pursuing risky strategies but fails to exact penalties for decision making that leads to bank failures, financial system disruption, government bailouts, and taxpayer losses. As a way to better align management's interests with those of other stakeholders such as creditors and taxpayers, the authors propose a cash holding requirement ...
Economic Policy Review , Issue Aug , Pages 77-83

Working Paper
The Community Reinvestment Act (CRA) and Bank Branching Patterns
Reid, Carolina; Ding, Lei (2019-10-01)
This paper examines the relationship between the Community Reinvestment Act (CRA) and bank branching patterns, measured by the risk of branch closure and the net loss of branches at the neighborhood level, in the aftermath of Great Recession. Between 2009 and 2017, there was a larger decline in the number of bank branches in lower-income neighborhoods than in more affluent ones, raising concerns about access to mainstream financial services. However, once we control for supply and demand factors that influence bank branching decisions, we find generally consistent evidence that the CRA is ...
Working Papers , Paper 19-36

Working Paper
Are Euro-Area Corporate Bond Markets Irrelevant? The Effect of Bond Market Access on Investment
von Beschwitz, Bastian; Howells, Conor T. (2016-06-30)
We compare how bond market access affects firms? investment decisions in the United States and the euro area. Having a bond rating enables US corporations to invest more and undertake more acquisitions. In contrast, in the euro area, bond ratings have no effect on investment decisions. Similarly, firms with bond ratings have higher leverage in the United States, but not in the euro area. This difference may be due to euro-area firms getting sufficient financing from banks. Consistent with this explanation, euro-area bond ratings became more relevant for investment after the banking crisis of ...
International Finance Discussion Papers , Paper 1176

Report
Buyout activity: the impact of aggregate discount rates
Haddad, Valentin; Loualiche, Erik; Plosser, Matthew (2013)
Buyout booms form in response to declines in the aggregate risk premium. We document that the equity risk premium is the primary determinant of buyout activity rather than credit-specific conditions. We articulate a simple explanation for this phenomenon: a low risk premium increases the present value of performance gains and decreases the cost of holding an illiquid investment. A panel of U.S. buyouts confirms this view. The risk premium shapes changes in buyout characteristics over the cycle, including their riskiness, leverage, and performance. Our results underscore the importance of the ...
Staff Reports , Paper 606

Working Paper
Corporate Mergers and Acquisitions Under Lender Scrutiny
Qiu, Buhui; Wang, Teng (2024-04-19)
This paper examines corporate mergers and acquisitions (M&A) outcomes under lender scrutiny. Using the unique shocks of U.S. supervisory stress testing, we find that firms under increased lender scrutiny after their relationship banks fail stress tests engage in fewer but higher-quality M&A deals. Evidence from comprehensive supervisory data reveals improved credit quality for newly originated M&A-related loans under enhanced lender scrutiny. This improvement is further evident in positive stock return reactions to M&A deals financed by loans subject to enhanced lender scrutiny. As companies ...
Finance and Economics Discussion Series , Paper 2024-025

Working Paper
Information Production, Misconduct Effort, and the Duration of Financial Misrepresentation
Pinheiro, Roberto; da Silva, Maximiliano; Black, Jonathan; Nilsson, Mattias (2016-06-01)
We examine the link between information produced by auditors and analysts and fraud duration. Using a hazard model, we analyze misstatement periods related to SEC accounting and auditing enforcement releases (AAERs) between 1982 and 2012. Results suggest that misconduct is more likely to end just after firms announce an auditor switch or issue audited financial statements, particularly when the audit report contains explanatory language. Analyst following increases the fraud termination hazard. However, increases (decreases) in analyst coverage have a negative (positive) marginal impact on ...
Working Papers , Paper 16-13R

Discussion Paper
The Community Reinvestment Act (CRA) and Bank Branching Patterns
Reid, Carolina; Ding, Lei (2019-09-10)
This paper examines the relationship between the Community Reinvestment Act (CRA) and bank branching patterns, measured by the risk of branch closure and the net loss of branches at the neighborhood level, in the aftermath of Great Recession. Between 2009 and 2017, there was a larger decline in the number of bank branches in lower-income neighborhoods than in more affluent ones, raising concerns about access to mainstream financial services. However, once we control for supply and demand factors that influence bank branching decisions, we find generally consistent evidence that the CRA is ...
Community Affairs Discussion Paper , Paper 19-1

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