Search Results
Showing results 1 to 10 of approximately 66.
(refine search)
Working Paper
Bank consolidation and small business lending: it's not just bank size that matters
Concern with the potential effect of bank mergers on small business lending has stemmed from a belief that larger acquirers may be less willing than their smaller targets to be active in the small business lending market. However, we find that in roughly half the commercial and savings bank mergers of the past three years, the acquirer has a larger portfolio share of small business loans than its target; moreover, the most common acquirer of small banks is another small bank. The empirical results support the hypothesis that acquirers tend to recast the target in their own image, causing ...
Discussion Paper
The role of banks in the transmission of monetary policy
The transmission of monetary policy, especially in light of recent events, has received increased attention, especially with respect to the efficacy of the bank lending channel. This paper summarizes the issues associated with isolating the bank lending channel and determining the extent to which it is operational. Evidence on the effectiveness of the bank lending channel is presented, both in the United States and abroad. The paper then provides observations about the likely consequences for the effectiveness of the lending channel of the changes in the financial environment associated with ...
Working Paper
Small business credit availability: how important is size of lender?
The recent relaxation of restrictions on interstate banking and branching, as well as the likely relaxation of Glass-Steagall restrictions, should encourage significant consolidation in the banking industry. Larger lenders, diversified across regions and products, will undoubtedly be less susceptible to adverse economic shocks that have buffeted the banking industry over the past decade. However, as small banks with a small business loan emphasis are absorbed into larger, more diversified lenders, which tend to focus much less on small business lending, credit availability to bank-dependent ...
Conference Paper
The effects of interstate branching on small business lending.
Journal Article
Is bank lending important for the transmission of monetary policy? An overview
To improve our understanding of the role of banks in the transmission of monetary policy, the Federal Reserve Bank of Boston convened a conference in June of 1995 to consider the question, "Is Bank Lending Important for the Transmission of Monetary Policy?" That banks are an important element in the transmission process is not an issue, because monetary policy operates through the banking sector. However, the description of the exact role played by banks remains hotly disputed, with the debate focusing on the importance of the role for bank lending as a transmission channel (the lending ...
Working Paper
Bank regulation and the credit crunch
This study investigates the direct link between regulatory enforcement actions and the shrinkage of bank loans to sectors likely to be bank dependent. We focus on New England because that region has experienced both the widespread application of formal regulatory actions and substantial reductions in new lending by banks. Controlling for weakness in loan demand, previous studies have been able to attribute part of this bank shrinkage to loan supply, with the degree of a bank?s shrinkage related to its capital-to-asset ratio. In this study, we further partition the shrinkage due to loan supply ...
Working Paper
The effects of changes in local-bank health on household consumption
This study investigates the relationship between credit availability and household consumption using a novel approach to separate credit demand and supply. We find that a deterioration in local bank health reduces household consumption, with the strongest effects occurring for households that are more likely to need credit—especially those experiencing a negative income shock and having limited liquid assets. The main contributions of the study are the use of an arguably exogenous measure of local bank health and multifaceted indicators of constrained households. Our findings contribute to ...
Working Paper
Derivatives activity at troubled banks
We find that a relatively large number of banks active in the derivatives market have low capital ratios and are considered institutions with a significant risk of failure by bank supervisors. However, we also find no evidence that the volume of derivatives activity at troubled banks affects the probability of formal regulatory intervention or even a downgrade in supervisory rating. While derivatives have become an essential instrument for hedging risks, moral hazard can lead to their misuse by problem banks. Given that the absence of comprehensive data on bank derivatives activities presents ...
Journal Article
Implications of the globalization of the banking sector: the Latin American experience
Foreign entry into domestic banking markets remains a contentious issue. Whether privatizing a state bank in Brazil or selling a failed bank in Japan, the proposed sale of a large domestic financial institution, possibly to a foreign acquirer, frequently results in a major controversy. Many Asian countries have yet to experience major foreign penetration of domestic banking markets, while Latin American countries have privatized many of their banks and have encouraged foreign banks to enter their domestic markets. ; Because many Latin American countries opened their markets during the 1990s, ...
Working Paper
Troubled banks, impaired foreign direct investment: the role of relative access to credit
The relative wealth hypothesis of Froot and Stein (1991), motivated by the aggregate correlation between real exchange rates and foreign direct investment (FDI) observed in the 1980s, cannot explain one of the major shifts in FDI in the 1990s: the continued decline in Japanese FDI during a period of stable stock prices and a rapidly appreciating yen. However, when the relative wealth hypothesis is supplemented with the relative access to credit hypothesis proposed in this study, we are able to show that unequal access to credit by Japanese firms can explain the FDI puzzle in the 1990s. We ...