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Journal Article
Banks’ Commercial Real Estate Risks Are Uneven
Investors have been acutely attuned to commercial real estate (CRE) risks recently due to higher interest rates and changes in how Americans work. On the surface, these risks may seem particularly concerning for small and regional banks, which tend to hold large concentrations of loans backed by commercial properties. However, we show that CRE risks can vary substantially across property types and geographic locations, suggesting that aggregate CRE exposure may be a poor measure of risk.
Journal Article
Interest Rates and Nonbank Market Share in the U.S. Mortgage Market
Differences in business models help explain how banks gain market share from nonbanks when interest rates are high.
Journal Article
Consumer Credit Cards Show Few Signs of Financial Stress
Since monetary policy tightening began in March 2022, interest rates have risen across a range of consumer financial products, including credit cards. However, the consumer credit market shows little sign of financial stress as of September 2024. While credit card delinquency rates have increased among subprime borrowers, internal bank assessments suggest that subprime default risks remain historically low.
Journal Article
Banks and Private Credit: Competitors or Partners?
Businesses are increasingly securing financing from the nonbank private credit market, which now rivals the size of comparable markets for bank loans or corporate bonds. While private credit may compete with banks for business loans, it also presents opportunities. Banks can lend to private credit funds themselves and generate larger returns than on traditional loans. Moreover, banks and private credit funds are likely lending to different borrowers, suggesting they may be more partners than direct competitors for now.
Working Paper
Monetary Policy Transmission, Bank Market Power, and Income Source
We provide empirical evidence on banks' market power in financial services and its implications for monetary policy transmission through deposit rates. Banks with market power in financial services charge higher fees for their service and also offer lower deposit rates with less pass-through from monetary policy. We argue that this is the result of product tying: consumers must open a deposit account to access a bank's financial services. We develop and calibrate a quantitative model of the U.S. banking industry where banks generate non-interest income from services in addition to a standard ...
Journal Article
Subprime Credit Card Delinquencies Have Fallen
Credit card delinquencies rose steadily for subprime borrowers from March 2022, when monetary policy tightening began, to November 2024. As of January 2025, however, the subprime delinquency rate has fallen for two consecutive months. This fall coincided with declines in both subprime credit card purchases as well as the annual percentage rate (APR) for subprime credit cards. Together, these declines suggest subprime borrowers had lower demand for credit card financing in recent months.