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Quantifying the costs of additional regulation on community banks
In this Economic Policy Paper, we quantify the cost of increased regulation on community banks. We do so by modeling the impact of new regulatory costs as the hiring of additional staff, resulting in higher total compensation and lower profitability. We then analyze the changes in the distribution of community bank profitability.
Bank derivative activity in the 1990s
This paper tries to grasp banks' motivation for entering derivative markets. The motivation question is interesting for the following reason: if banks' main motivation for using derivatives is speculation, derivatives are likely to increase the risk to banks' capital and thus increase the cost of deposit insurance. ; The first major finding of the paper is that currently available data are not informative of banks' usage of derivatives. We find no evidence that derivatives are mainly used for speculation purposes. There is some indication that users of derivatives are interested in expanding ...