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Journal Article
How Our Region Differs
The banking industry has undergone a sea change in the last 30 years. Regulatory changes and technological advances have led to dramatic increases in the size and market share of large banks, while banks have shifted their activities notably away from commercial lending toward real estate lending. While these broad trends are true of banks in the Third District served by the Federal Reserve Bank of Philadelphia, our regional banking market also differs in some interesting ways. Our small regional banks are larger and concentrate much more heavily on residential real estate lending and less on ...
Journal Article
Do Stress Tests Reduce Credit Growth?
Stress tests are supposed to ensure your access to credit during the next downturn, but some critics claim that they also limit your access to credit today. We test that theory.
Journal Article
The Rise in Loan-to-Deposit Ratios: Is 80 the New 60?
Liquidity ratios at small banks have climbed in recent decades. Why has this happened? Should regulators be concerned? A traditional signal that a bank may not have enough liquid assets to cover a sudden loss of funding has increased dramatically at small banks in recent decades. Small banks? median ratio of the value of their loans outstanding to the value of their deposits has risen from around 60 percent in the second half of the 1980s to around 80 percent today. Meanwhile, the same measure of liquidity has increased about 5 percentage points at large banks. How can we explain this big ...
Journal Article
Measuring Cov-Lite Right
More business loans today lack traditional covenants governing borrowers. Does that leave banks with fewer tools to ward off default?
Journal Article
Credit Unions’ Expanding Footprint, Is there any evidence new rules could cause small banks to lose market share to credit unions?
One of the main banking stories of the past 25 years has been the dramatic growth of large banks. Less well known is that credit unions have been expanding their market share during this time, too, especially after membership criteria were relaxed in 1998. While credit unions have been increasing their market share, small banks? market share has declined. And now, legal changes that took effect in January 2017 expanded credit unions? capacity to make loans to commercial customers, raising further concern among small banks that they might lose ground to credit unions
Journal Article
Banking Trends: Skin in the Game in the CMBS Market
Issuers of commercial mortgage-backed securities must now retain a portion on their own books. What evidence is there that the rule will reduce risky lending?
Journal Article
Banking Trends: How and Why Bank Capital Ratios Change Over the Business Cycle
Small-bank and large-bank capital ratios behave quite differently. To under-stand the difference, look at the data.
Journal Article
Banking Trends Discrimination in Mortgage Markets
Automated underwriting may reduce but likely does not end discrimination against racial minorities.
Journal Article
Banking Trends: The Growing Role of CRE Lending
Commercial real estate has grown dramatically as a share of U.S. economic activity and is banks? largest lending category, particularly for small and midsize banks. It is also the riskiest part of bank portfolios. James DiSalvo and Ryan Johnston provide a primer. First in a series.
Journal Article
Banking Trends: Estimating Today's Commercial Real Estate Risk
To survive a decline in commercial real estate prices such as occurred during the financial crisis, how much more capital do banks today need?