Journal Article
Stock return and interest rate risk at Fannie Mae and Freddie Mac
Schmid, Frank A. (2005-01)
Fannie Mae and Freddie Mac are government-sponsored enterprises (GSEs) with the stated objective of promoting home ownership by improving the availability of mortgage financing for private households. These enterprises engage in two separate and distinct lines of business: (i) assembling and marketing pools of mortgages on which they guarantee the timely payments of principal and interest and (ii) purchasing mortgage assets for their own portfolio, mostly funded with debt securities. This article examines the sensitivity of the returns on GSEs' equity shares to realizations of interest rate ...
Review , Volume 87 , Issue Jan , Pages 35-48

Journal Article
Credit unions and the common bond
Schmid, Frank A.; Emmons, William R. (1999-09)
A distinguishing feature of credit unions is the legal requirement that members share a common bond. This organizing principle recently became the focus of national attention when the Supreme Court and the U.S. Congress took opposite sides in a controversy regarding the number of common bonds (fields of membership) that could coexist within a single credit union. In this article, Emmons and Schmid develop and simulate a model of credit-union formation and consolidation to examine the effects of common-bond restrictions on the performance of credit unions. The performance measures are ...
Review , Volume 81 , Issue Sep , Pages 41-64

Journal Article
The Asian crisis and the exposure of large U.S. firms
Schmid, Frank A.; Emmons, William R. (2000-01)
A deep financial and economic crisis ravaged many Asian nations during 1997 and 1998. In this article, William Emmons and Frank Schmid examine the impact of the crisis on corporate risk for a subset of large U.S. firms that are included in the S&P 100 stock-market index. They find that the Asian crisis changed many of these firms' exposure to stock-market movements-that is, their "betas" or sensitivity to stock-market risk. In particular, the extent of a firm's sales exposure to Asia appears to be an important link through which the crisis affected beta. This effect is amplified by ...
Review , Volume 82 , Issue Jan , Pages 15-34

Working Paper
Monetary policy actions and the incentive to invest
Schmid, Frank A.; Emmons, William R. (2004)
The ability of monetary policy actions to affect the private sector's incentive to invest in fixed capital is hotly debated. Whereas a downward shift in the yield curve increases the present value of expected cash flows and should spur investment, lower short term interest rates make delay more desirable. These influences work against each other so the net effect of stimulative monetary policy actions could go either way. This article outlines a simple investment decision rule that captures both effects of changing interest rates. It also clarifies why monetary policy actions that shift the ...
Working Papers , Paper 2004-018

Working Paper
Banks vs. credit unions; dynamic competition in local markets
Schmid, Frank A.; Emmons, William R. (2000)
One interesting aspect of the financial services industry is that for-profit institutions such as commercial banks compete directly with not-for-profit financial intermediaries such as credit unions. In this article, we analyze competition among banks and between banks and credit unions using a dynamic model of spatial competition. The model allows for the co-existence of (for-profit) banks and (not-for-profit) credit unions. Using annual county-level data on banking market concentration and credit-union participation rates for the period 1989-96, we find empirical evidence of two-way ...
Working Papers , Paper 2000-006

Journal Article
Monetary policy actions, macroeconomic data releases, and inflation expectations
Schmid, Frank A.; Kliesen, Kevin L. (2004-05)
This article analyzes how announced surprises in monetary policy actions and macroeconomic data releases affect the average rate of inflation that economic agents expect to prevail over the 10-year period following the surprise. The analysis also addresses the effect of Federal Reserve communication and surprises in monetary policy actions on perceived inflation risk over this 10-year period. The study shows that surprises in macroeconomic data releases and monetary policy actions indeed affect the expected rate of inflation. Further, there is evidence that surprises in monetary policy ...
Review , Volume 86 , Issue May , Pages 9-22

Journal Article
Macroeconomic news and real interest rates
Schmid, Frank A.; Kliesen, Kevin L. (2006-03)
Economic news affects the perceptions of investors, forecasters, and policymakers about the strength or weakness of the economy. These expectations are updated on the basis of regularly occurring surprises in macroeconomic announcement data. The response of asset prices to positive or negative announcement surprises has been a regular feature of the literature for more than 20 years. In this vein, the authors evaluate the responses of the yield of 10-year Treasury inflation-indexed securities to nearly three dozen macroeconomic announcements. They find that the real long-term rate of interest ...
Review , Volume 88 , Issue Mar , Pages 133-144

Journal Article
Fear of hell might fire up the economy
Schmid, Frank A.; Kliesen, Kevin L. (2004-07)
In those countries where a large percentage of the population believes in hell, there seem to be less corruption and a higher standard of living.
The Regional Economist , Issue Jul , Pages 10-11

Journal Article
Castles in the sky?
Schmid, Frank A. (2002-09)
National Economic Trends , Issue Sep

Journal Article
e-cash
Schmid, Frank A. (2000-06)
Monetary Trends , Issue Jun