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Speech
The 2015 economic outlook and the implications for monetary policy
Remarks at Bernard M. Baruch College, New York City.
Working Paper
The Fed Put and Bank Risk-Taking Evidence from the Loan Book
This paper shows that monetary policy influences bank credit policy through the risk-taking channel. Using option prices on Federal Open Market Committee (FOMC) announcement days, we measure the impact of monetary policy on bank equity tail risks and link them to loan-level regulatory data. Banks that experience a decline in tail risk lend more to riskier firms and ease loan terms in the three weeks after the FOMC announcement. These effects are concentrated among banks with short-term compensation structures and in competitive credit markets. Our results isolate the impact of bank ...