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29 posts on "Credit"

August 19, 2016

Historical Echoes: That’s Where the Celebrity Advertising Was, or the Gentleman Bank Robber



LSE_http://libertystreeteconomics.newyorkfed.org/2016/08/historical-echoes-thats-where-the-celebrity-advertising-was-or-the-gentleman-bank-robber.html

In 1970, New Britain Bank and Trust (inactive as of 1984) ran a television advertisement that starred a real-life bank robber touting a safety feature of its new “face card.” (A History Channel video includes interesting preliminaries about how the journalists obtained the ad; the ad itself starts at 5:44.) Why would this bank be willing to create such an ad? Of course, neither this bank, nor any other bank, nor any Federal Reserve Bank would condone the act of robbing a bank. But this particular thief, the notorious Willie Sutton (1901-80), was different from typical bank robbers. Let’s consider why:

Continue reading "Historical Echoes: That’s Where the Celebrity Advertising Was, or the Gentleman Bank Robber" »

Posted by Blog Author at 7:00 AM in Credit, Historical Echoes, Macroecon | Permalink | Comments (1)

August 12, 2016

Puerto Rico’s Evolving Household Debts



LSE_Puerto Rico’s Evolving Household Debts

Debt and its performance play a critical role in economic development. The enormous increase in mortgage debt that took place during the run-up to the 2007 financial crisis and the contribution of that debt to the crisis underscore the importance of household debt to financial stability and economic growth. While we regularly report on household debt at the national level and for selected states in our Quarterly Report on Household Debt and Credit, we have not reported separately on Puerto Rico. This post introduces metrics on household debt in Puerto Rico, which we plan to update regularly. Like our other reports on household debt, this analysis uses our FRBNY Consumer Credit Panel, which is based on anonymized credit data from Equifax. We also take a look at some data for Puerto Rico’s banking sector to complete the picture of household debt for the Commonwealth.

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Posted by Blog Author at 7:00 AM in Credit, Household Finance, Puerto Rico, Regional Analysis | Permalink | Comments (0)

August 09, 2016

Just Released: Recent Developments in Consumer Credit Card Borrowing



LSE_2016_Just Released: Recent Developments in Consumer Credit Card Borrowing

The Federal Reserve Bank of New York’s Center for Microeconomic Data today released its Quarterly Report on Household Debt and Credit for the second quarter of 2016. It showed that overall household debt increased modestly over the period, with subdued mortgage originations and moderate but continued increases in non-housing related credit—particularly auto loans and credit cards. The total outstanding credit card balance now stands at $729 billion, up $17 billion from the first quarter, but still well below the peak of $866 billion reached in the fourth quarter of 2008. Credit card delinquency rates have continued to improve since peaking in 2008. We have previously “looked under the hood” of auto loans, and in this post, we present analysis that provides new insight into credit card debt by examining trends in credit card issuance and usage. The Quarterly Report and the following analyses are based on data from the New York Fed’s Consumer Credit Panel, which is a nationally representative sample drawn from Equifax credit reports.

Continue reading "Just Released: Recent Developments in Consumer Credit Card Borrowing" »

August 08, 2016

Restoring Economic Growth in Puerto Rico: Introduction to the Series



LSE_Restoring Economic Growth in Puerto Rico: Introduction to the Series


The difficult economic and financial issues facing the Commonwealth of Puerto Rico have remained very much in the news since our post on options for addressing its fiscal problems appeared last fall. That post was itself a follow-up on a series of analyses, starting with a 2012 report that detailed the economic challenges facing the Commonwealth. In 2014, we extended that analysis with an update where we focused more closely on the fiscal challenges facing the Island. As the problems deepened, we have continued to examine important related subjects ranging from positive revisions in employment data, to the credit conditions faced by small businesses, to understanding emigration, and to considering how the Commonwealth’s public debts stack up. In most of this work, we have focused on how policymakers could help to address the immediate issues facing the Island and its people. The U.S. Congress and the Obama Administration took action in June to provide a framework to help address Puerto Rico’s fiscal crisis. But much remains to be done to address these ongoing problems, which represent a significant impediment to economic growth in the short run. It also seems important to revisit the question of the prospects for reviving longer-run growth in the Commonwealth. These concerns were underscored by projections published by the International Monetary Fund (IMF) in the April edition of the World Economic Outlook that forecast Puerto Rico’s real GDP and population to decline through 2021.

Continue reading "Restoring Economic Growth in Puerto Rico: Introduction to the Series" »

August 01, 2016

Which Households Have Negative Wealth?



Editors’ note: Some numbers related to the relative exposure of households to credit card debt and housing assets have been corrected. (August 2)

LSE_Which Households Have Negative Wealth?

At some point in its life a household’s total debt may exceed its total assets, in which case it has “negative wealth.” Even if this status is temporary, it may affect the household’s ability to save for durable goods, restrict access to further credit, and may require living in a state of limited consumption. Detailed analysis of the holdings of negative-wealth households, however, is a topic that has received little attention. In particular, relatively little is known about the characteristics of such households or about what drives negative wealth. A better understanding of these factors could also prove valuable in explaining and forecasting the persistence of wealth inequality. In this post, we take advantage of a special module of the Survey of Consumer Expectations to shed light on this issue.

Continue reading "Which Households Have Negative Wealth?" »

Posted by Blog Author at 7:00 AM in Credit, Household Finance | Permalink | Comments (2)

July 13, 2016

Could Liquidity Regulation Revive the Bank Lending Channel?

Dong Beom Choi and Ulysses Velasquez

LSE_Could Liquidity Regulation Revive the Bank Lending Channel?

How does monetary policy affect spending in the economy? The economic literature suggests two main channels of monetary transmission: the money or interest rate channel and the bank lending channel. The first view focuses on changes in real interest rates resulting from a shift in monetary policy and corresponding responses in consumption, saving, and investment. The second view focuses on changes in the supply of bank credit resulting from an altered policy stance and concomitant changes in spending.

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Posted by Blog Author at 7:00 AM in Credit, Liquidity, Regulation | Permalink | Comments (2)

July 11, 2016

How Have High Reserves and New Policy Tools Reshaped the Fed Funds Market?



Over the last decade, the federal funds market has evolved to accommodate new policy tools such as interest on reserves and the overnight reverse repo facility. Trading motives have also responded to the expansion in aggregate reserves as the result of large-scale asset purchases. These changes have affected market participants differently since, for instance, not all institutions are required to keep reserves at the Fed and some are not eligible to earn interest on reserves. Differential effects have changed the profile of participants willing to borrow and lend in this market, and this shift provides an opportunity to study how unconventional policy actions shape participant incentives. In today’s post, we take a detailed look at regulatory filings to identify the main players in today’s fed funds market and understand how their roles have evolved.

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Posted by Blog Author at 7:00 AM in Credit, Fed Funds | Permalink | Comments (0)

May 25, 2016

The Macro Effects of the Recent Swing in Financial Conditions



Credit conditions tightened considerably in the second half of 2015 and U.S. growth slowed. We estimate the extent to which tighter credit conditions last year were responsible for the slowdown using the FRBNY DSGE model. We find that growth would have slowed substantially more had the Federal Reserve not delayed liftoff in the federal funds rate.

Continue reading "The Macro Effects of the Recent Swing in Financial Conditions" »

May 23, 2016

The FRBNY DSGE Model Forecast—May 2016



The May 2016 forecast of the Federal Reserve Bank of New York’s (FRBNY) dynamic stochastic general equilibrium (DSGE) model remains broadly in line with those of our two previous semiannual reports (see our May 2015 and December 2015 posts). In the past year, the headwinds that contributed to slower growth in the aftermath of the financial crisis finally began to abate. However, the widening of credit spreads associated with swings in financial markets in the second half of 2015 and the first few months of this year have had a negative impact on economic activity. Despite this setback, the model expects a rebound in growth in the second half of the year, so that the medium-term forecast remains, as in the December post, one of steady, gradual economic expansion. The model also continues to predict gradual progress in the inflation rate toward the Federal Open Market Committee’s (FOMC) long-run target of 2 percent.

Continue reading "The FRBNY DSGE Model Forecast—May 2016" »

March 27, 2015

Just Released: SCE Credit Access Survey Shows Higher Likelihood of Consumers Applying for Credit



The Federal Reserve Bank of New York today released results from its February 2015 Survey of Consumer Expectations Credit Access Survey, which provides information on consumers' experiences with and expectations about credit demand and credit access. The survey shows little change in application rates for credit over the last twelve months, but a decline in rejection rates, in particular for credit card limit increases. The expectations component of the survey shows an increase in the average likelihood of consumers applying for credit over the next twelve months for all five credit products; the increase is most pronounced for mortgage refinances and higher credit card limits.

Continue reading "Just Released: SCE Credit Access Survey Shows Higher Likelihood of Consumers Applying for Credit" »

Posted by Blog Author at 10:15 AM in Credit, Household Finance, Inflation | Permalink | Comments (0)
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