Search Results

Showing results 1 to 4 of approximately 4.

(refine search)
SORT BY: PREVIOUS / NEXT
Keywords:Capital regulation 

Working Paper
Un-used Bank Capital Buffers and Credit Supply Shocks at SMEs during the Pandemic

Did banks curb lending to creditworthy small and mid-sized enterprises (SME) during the COVID-19 pandemic? Sitting on top of minimum capital requirements, regulatory capital buffers introduced after the 2008 global financial crisis (GFC) are costly regions of "rainy day" equity capital designed to absorb losses and provide lending capacity in a downturn. Using a novel set of confidential loan level data that includes private SME firms, we show that "buffer-constrained" banks (those entering the pandemic with capital ratios close to this regulatory buffer region) reduced loan commitments to ...
Finance and Economics Discussion Series , Paper 2021-043

Report
The Cost of Financial Frictions for Life Insurers

During the financial crisis, life insurers sold long-term policies at deep discounts relative to actuarial value. The average markup was as low as ?19 percent for annuities and ?57 percent for life insurance. This extraordinary pricing behavior was due to financial and product market frictions, interacting with statutory reserve regulation that allowed life insurers to record far less than a dollar of reserve per dollar of future insurance liability. We identify the shadow cost of capital through exogenous variation in required reserves across different types of policies. The shadow cost was ...
Staff Report , Paper 500

Report
Shadow Insurance

Liabilities ceded by life insurers to shadow reinsurers (i.e., affiliated and less regulated off-balance-sheet entities) grew from $11 billion in 2002 to $364 billion in 2012. Life insurers using shadow insurance, which capture half of the market share, ceded 25 cents of every dollar insured to shadow reinsurers in 2012, up from 2 cents in 2002. Our adjustment for shadow insurance reduces risk-based capital by 53 percentage points (or 3 rating notches) and raises default probabilities by a factor of 3.5. We develop a structural model of the life insurance industry and estimate the impact of ...
Staff Report , Paper 505

Discussion Paper
Intermediary Leverage Cycles and Financial Stability

The financial crisis of 2007-09 highlighted the central role that financial intermediaries play in the propagation and amplification of shocks. Intermediaries increase leverage during the boom, which then makes them more vulnerable to adverse economic developments. In this post, we review evidence on the balance-sheet behavior of financial intermediaries and describe a channel that allows intermediaries to increase leverage during booms when asset market volatility tends to be low, which in turn forces them to dramatically reduce leverage once volatility increases. As shown during the ...
Liberty Street Economics , Paper 20131120

FILTER BY year

FILTER BY Content Type

FILTER BY Author

FILTER BY Jel Classification

G28 3 items

G22 2 items

G01 1 items

G1;G2 1 items

G20 1 items

G21 1 items

show more (3)

PREVIOUS / NEXT