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Working Paper
The Effects of Liquidity Regulation on Bank Demand in Monetary Policy Operations
We estimate the effects of the liquidity coverage ratio (LCR), a liquidity requirement for banks, on the tenders that banks submit in Term Deposit Facility operations, a Federal Reserve tool created to manage the quantity of bank reserves. We identify these effects using variation in LCR requirements across banks and a change over time that allowed term deposits to count toward the LCR. Banks subject to the LCR submit tenders more often and submit larger tenders than exempt banks when term deposits qualify for the LCR. These results suggest that liquidity regulation affects bank demand in ...
Discussion Paper
Why Are Net Interest Margins of Large Banks So Compressed?
This note analyzes recent trends in net interest margins (NIMs) at domestic bank holding companies.
Discussion Paper
How Do U.S. Global Systemically Important Banks Lower Their Capital Surcharges?
In this note, we examine whether and how U.S. G-SIBs adjust their systemic importance indicators to lower their surcharges.
Discussion Paper
The Effects of Liquidity Regulation on Participation in the Term Deposit Facility
We find that banks subject to the Liquidity Coverage Ratio (LCR) submit tenders relatively more often than banks not subject to it in operations that allow banks to withdraw funds prior to the maturity date.
Working Paper
The Effects of Bank Charter Switching on Supervisory Ratings
I study whether commercial banks can improve their supervisory ratings by switching charters. I use the fees charged by chartering authorities to establish a causal effect from switching on ratings. Banks receive more favorable ratings after they change charters, an effect that is large for both national and state charters. In addition, controlling for bank ratings, banks that switch charters fail more often than others. These results suggest that banks can arbitrage ratings by switching charters and are consistent with regulators competing for banks by rating incoming banks better than ...
Working Paper
Are Banks' Internal Risk Parameters Consistent? Evidence from Syndicated Loans
This paper examines consistency in the estimates of probability of default (PD) and loss given default (LGD) that nine large U.S. banks assign to syndicated loans for regulatory capital purposes. Using internal bank data on loans that had PDs and LGDs assigned by more than one bank, we find substantial dispersion in these parameters. Banks differ substantially in PDs, but only a few set PDs systematically higher or lower than the median bank. However, many banks differ from the median bank systematically in LGDs, and these differences affect their Basel II minimum regulatory capital ...
Working Paper
How do joint supervisors examine financial institutions? the case of state banks
This paper studies what determines whether federal and state supervisors examine state banks independently or together. The results suggest that supervisors coordinate examinations in order to support states with lower budgets and capabilities and more banks to supervise. I find that states with larger budgets examine more banks independently, that they accommodate changes in the number of banks mostly through the number of examinations with a federal supervisor and that, when examining banks together, state banking departments that have earned quality accreditation are more likely to write ...
Discussion Paper
Estimating System Demand for Reserve Balances Using the 2018 Senior Financial Officer Survey
In this Note, we introduce a range of estimates of the banking system’s contemporary demand for reserves based on newly available, confidential micro data from a Senior Financial Officer Survey (SFOS) conducted by the Federal Reserve in September 2018.
Discussion Paper
Relation Between Levels and Changes in Lending Standards Reported by Banks in the Senior Loan Officer Opinion Survey on Bank Lending Practices
This note uses bank-level answers to the Senior Loan Officer Opinion Survey on Bank Lending Practices (SLOOS) to investigate the relation between levels and changes in lending standards reported by banks. We provide evidence that banks' responses about levels and changes in standards are positively correlated, although this relationship is not clear in summary statistics. These results suggest that banks’ responses to the quarterly SLOOS questions and their annual counterparts contain independent information about their lending practices.
Discussion Paper
Interest on Excess Reserves and U.S. Commercial Bank Lending
In this note, we empirically assess whether changes in the interest on excess reserves (IOER) rate and changes in the spread between the IOER rate and the effective federal funds rate (EFFR) have affected banks’ reserve holdings and lending, controlling for changes in the stance of monetary policy and other macroeconomic conditions.