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Working Paper
Separating the likelihood and timing of bank failure
Working Paper
Payments-related intraday credit differentials and the emergence of a vehicle currency
The U.S. dollar serves as a vehicle currency or medium of exchange in the global foreign exchange markets. After reviewing some of the existing theories on vehicle currencies, the hypothesis put forth is that the dollar's role is linked to the relatively low cost of payments-related intraday credit available to payment system participants. Differences in the types of measures used by payment system operators to reduce settlement and systemic risk in the payment system give rise to liquidity differentials between currencies. ; After reviewing the types of intraday credit facilities extended to ...
Working Paper
Adverse selection and competing deposit insurance systems in pre-depression Texas
In 1910, Texas instituted a highly unique deposit insurance program for its state chartered banks consisting of two separate plans: the depositors guaranty fund, similar in operation to the deposit insurance schemes adopted in several other states; and the depositors bond security system, which required the procurement of a privately issued insurance policy. We hypothesize that the provision of a choice in funds led to risk-sorting among the banks, with the relatively conservative institutions opting for the comparatively rigorous bond security system. Employing a probit model with ...
Working Paper
Agency conflicts and thrift resolution costs