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Discussion Paper
The Effects of the COVID-19 Shutdown on the Consumer Credit Card Market: Revolvers versus Transactors
The consumer credit card market has experienced dramatic, unprecedented changes in the wake of the COVID-19 shutdown of the U.S. economy. Revolving credit in the G.19 Consumer Credit statistical release fell by an annualized rate of 32 percent in the second quarter of 2020.
Working Paper
Market power in outputs and inputs: an empirical application to banking
This paper provides evidence on the empirical separability of input and output market imperfections. We specify a model of banking competition and simultaneously estimate bank conduct in output (loan) and input (deposit) markets. Our results suggest that firms display some degree of non-competitive behavior in both the loan and the deposit markets. Moreover, we find that the input side and the output side are empirically separable, that is, the measurement of market power on one side of the market is not affected by assuming that the other side of the market is perfectly competitive. Our ...
Working Paper
The effects of past entry, market consolidation, and expansion by incumbents on the probability of entry
The threat of entry is an important factor in the evaluation of the potential competitive effects of proposed mergers and acquisitions. In the evaluation of proposed bank mergers, a high probability of entry, or strong potential competition, is often found to mitigate the potential anticompetitive effect of a proposed horizontal merger. Because the probability of entry is not directly observed for each local market, variables such as per capita income, population growth and past entry are typically used to predict the probability of future entry. This study extends previous research on the ...
Working Paper
Where Are All the New Banks? The Role of Regulatory Burden in New Charter Creation
New bank formation in the U.S. has declined dramatically since the financial crisis, from well over 100 new banks per year to less than 1. Many have suggested that this is due to newly-instituted regulation, but the current weak economy and low interest rates (which both depress banking profits) could also have played a role. We estimate a model of bank entry decisions on data from 1976 to 2013 which indicates that at least 75% of the decline in new bank formation would have occurred without any regulatory change. The standalone effect of regulation is more difficult to quantify.
Working Paper
The effects of local banking market structure on the banking-lending channel of monetary policy
We study the relationship between banking competition and the transmission of monetary policy through the bank lending channel. Using business small loan origination data provided from the Community Reinvestment Act from 1996-2002 in our analysis, we are able to reaffirm the existence of the bank lending channel of monetary transmission. Moreover, we find that the impact of monetary policy on loan originations is weaker in more concentrated markets.
Discussion Paper
Why Did Credit Card Balances Decline so Much during the COVID-19 Pandemic?
Consumer credit card balances in the United States experienced unprecedented declines during the COVID-19 pandemic. According to the G.19 Consumer Credit statistical release, revolving consumer credit fell more than $120 billion (11 percent) in 2020, the largest decline in both nominal and percentage terms in the history of the series.
Conference Paper
Preface
Working Paper
Bank Fees, Aftermarkets, and Consumer Behavior
Fees for banking services have been a policy concern for over 20 years and the subject of several government agencies studies, which focused on the magnitude, incidence, or disclosure of such fees. Using a sample of single market banks, I study the relationship between market-level consumer characteristics and bank fee revenue, fees, and bank return on assets (ROA) to infer consumer and firm behavior. Of particular interest, I use county-level IRS tax records as a measure of the consumer income distribution, but my analysis also includes measures of age and education distributions. I find ...
Journal Article
Money, the fallacy of composition, and inflation
Discussion Paper
Do Marketplace Lending Platforms Offer Lower Rates to Consumers?
This note analyzes interest rates of loans from the two largest P2P platforms, Lending Club and Prosper, to observe their potential benefits to borrowers.