Search Results

(refine search)

SORT BY: PREVIOUS / NEXT

All:
Title:
Author:
Abstract:
Keywords:

+ Add Search Parameter

Discussion Paper
Why Do Banks Fail? Bank Runs Versus Solvency
Correia, Sergio A.; Luck, Stephan; Verner, Emil (2024-11-25)
Evidence from a 160-year-long panel of U.S. banks suggests that the ultimate cause of bank failures and banking crises is almost always a deterioration of bank fundamentals that leads to insolvency. As described in our previous post, bank failures—including those that involve bank runs—are typically preceded by a slow deterioration of bank fundamentals and are hence remarkably predictable. In this final post of our three-part series, we relate the findings discussed previously to theories of bank failures, and we discuss the policy implications of our findings.
Liberty Street Economics , Paper 20241125

Journal Article
Historical Patterns around Financial Crises
Pedtke, Joseph H.; Paul, Pascal (2020-05-04)
Long-run historical data for advanced economies provide evidence to help policymakers understand specific conditions that typically lead up to financial crises. Recent research finds that rapid growth in the top income share and prolonged low labor productivity growth are robust predictors of crises. Moreover, if crises are preceded by these developments, then the subsequent recoveries are slower. This recent empirical evidence suggests that financial crises are not simply random events but are typically preceded by a prolonged buildup of macrofinancial imbalances.
FRBSF Economic Letter , Volume 2020 , Issue 10 , Pages 05

Report
Estimating Macroeconomic Models of Financial Crises: An Endogenous Regime-Switching Approach
Benigno, Gianluca; Foerster, Andrew T.; Otrok, Christopher; Rebucci, Alessandro (2020-10-01)
We estimate a workhorse dynamic stochastic general equilibrium (DSGE) model with an occasionally binding borrowing constraint. First, we propose a new speciﬁcation of the occasionally binding constraint, where the transition between the unconstrained and constrained states is a stochastic function of the leverage level and the constraint multiplier. This speciﬁcation maps into an endogenous regime-switching model. Second, we develop a general perturbation method for the solution of such a model. Third, we estimate the model with Bayesian methods to ﬁt Mexico’s business cycle and ...
Staff Reports , Paper 944

Discussion Paper
Measuring the Financial Stability Real Interest Rate, r**
Akinci, Ozge; Benigno, Gianluca; Del Negro, Marco; Nourbash, Ethan; Queraltó, Albert (2023-05-24)
Comparing our financial stability real interest rate, r** (“r-double-star”) with the prevailing real interest rate gives a measure of how vulnerable the economy is to financial instability. In this post, we first explain how r** can be measured, and then discuss its evolution over the last fifty years and how to interpret the recent banking turmoil within this framework.
Liberty Street Economics , Paper 20230524

Working Paper
Wholesale Banking and Bank Runs in Macroeconomic Modeling of Financial Crises
Gertler, Mark; Kiyotaki, Nobuhiro; Prestipino, Andrea (2016-01-29)
There has been considerable progress in developing macroeconomic models of banking crises. However, most of this literature focuses on the retail sector where banks obtain deposits from households. In fact, the recent financial crisis that triggered the Great Recession featured a disruption of wholesale funding markets, where banks lend to one another. Accordingly, to understand the financial crisis as well as to draw policy implications, it is essential to capture the role of wholesale banking. The objective of this paper is to characterize a model that can be seen as a natural extension of ...
International Finance Discussion Papers , Paper 1156

Working Paper
Is a Friend in Need a Friend Indeed? How Relationship Borrowers Fare during the COVID-19 Crisis
Berger, Allen N.; Bouwman, Christa H. S.; Roman, Raluca; Udell, Gregory F.; Norden, Lars (2021-03-25)
We analyze loan contract terms, investigating whether relationship borrowers fare better or worse than others in times of need, using the COVID-19 crisis as a quasi-natural experiment. COVID-19 is superior to prior crises for such analysis because its public health and government restrictions shocks directly harm borrowers, rather than banks. Our dataset includes Y-14Q, covering syndicated and non syndicated loans and small and large firms, unlike some other datasets. We find the dark side of relationships dominates across four relationship measures, 14 COVID-19 shocks, and PPP participation. ...
Working Papers , Paper 21-13

Working Paper
Bank Ownership, Lending, and Local Economic Performance During the 2008-2010 Financial Crisis
Feler, Leo; Coleman, Nicholas (2014-03-05)
While the finance literature often equates government banks with political capture and capital misallocation, these banks can help mitigate financial shocks. This paper examines the role of Brazil?s government banks in preventing a recession during the 2008-2010 financial crisis. Government banks in Brazil provided more credit, which offset declines in lending by private banks. Areas in Brazil with a high share of government banks experienced increases in lending, production, and employment during the crisis compared to areas with a low share of these banks. We find no evidence that lending ...
International Finance Discussion Papers , Paper 1099

Working Paper
How New Fed Corporate Bond Programs Dampened the Financial Accelerator in the COVID-19 Recession
Bordo, Michael D.; Duca, John V. (2020-11-19)
In the financial crisis and recession induced by the COVID-19 pandemic, many investment-grade firms became unable to borrow from securities markets. In response, the Fed not only reopened its commercial paper funding facility but also announced it would purchase newly issued and seasoned bonds of corporations rated as investment grade before the COVID pandemic. A careful splicing of different unemployment rate series enables us to assess the effectiveness of recent Fed interventions in these long-term debt markets over long sample periods, spanning the Great Depression, Great Recession and ...
Working Papers , Paper 2029

Discussion Paper
How (Un-)Informed Are Depositors in a Banking Panic? A Lesson from History
Blickle, Kristian S.; Brunnermeier, Markus K.; Luck, Stephan (2022-02-17)
How informed or uninformed are bank depositors in a banking crisis? Can depositors anticipate which banks will fail? Understanding the behavior of depositors in financial crises is key to evaluating the policy measures, such as deposit insurance, designed to prevent them. But this is difficult in modern settings. The fact that bank runs are rare and deposit insurance universal implies that it is rare to be able to observe how depositors would behave in absence of the policy. Hence, as empiricists, we are lacking the counterfactual of depositor behavior during a run that is undistorted by the ...
Liberty Street Economics , Paper 20220217

Report
Financial Stability Considerations for Monetary Policy: Empirical Evidence and Challenges
Boyarchenko, Nina; Favara, Giovanni; Schularick, Moritz (2022-02-01)
This paper reviews literature on the empirical relationship between vulnerabilities in the financial system and the macroeconomy, and how monetary policy affects that connection. Financial vulnerabilities build up over time, with both risk appetite and risk taking rising during economic expansions. To some extent, financial crises are predictable and have severe real economic consequences when they occur. Empirically it is difficult to link monetary policy to financial vulnerabilities, in part because financial cycles have long durations, making it difficult to separate effects of changes in ...
Staff Reports , Paper 1003

show more (1)

show more (48)

PREVIOUS / NEXT

Fed in Print

Search Results

FILTER BY year

FILTER BY Bank

FILTER BY Series

FILTER BY Content Type

FILTER BY Author

FILTER BY Jel Classification

FILTER BY Keywords