260 posts on "Financial Institutions"
April 1, 2014
Mixing and Matching Collateral in Dealer Banks
The failure or near-collapse of some of the largest dealer banks on Wall Street in 2008 highlighted the profound complexity of the industry.
March 27, 2014
The Growth of Murky Finance
Building upon previous posts in this series that discussed individual banks, we examine the historical growth of the entire financial sector, relative to the rest of the economy.
Posted at 7:00 am in Economic History, Financial Institutions, Financial Markets, Regulation | Permalink | Comments (3)
March 26, 2014
Do “Too‑Big‑to‑Fail” Banks Take On More Risk?
In the previous post, João Santos showed that the largest banks benefit from a bigger discount in the bond market relative to the largest nonbank financial and nonfinancial issuers.
Evidence from the Bond Market on Banks’ “Too‑Big‑to‑Fail” Subsidy
Yesterday’s post presented evidence on a possible upside of very large banks, namely, lower costs.
March 25, 2014
Do Big Banks Have Lower Operating Costs?
Despite recent financial reforms, there is still widespread concern that large banking firms remain “too big to fail.”
Introducing a Series on Large and Complex Banks
The chorus of criticism levied against mega-banks has, in some cases, outrun the research needed to back the criticism.
February 26, 2014
Factors that Affect Bank Stability
Thomas M. Eisenbach and Tanju Yorulmazer In a previous Liberty Street Economics post, we introduced a framework for thinking about the risks banks face. In particular, we distinguished between asset return risk and funding risk that can interact and cause a bank to fail. In our framework, a bank can fail for two reasons:
February 24, 2014
What Makes a Bank Stable? A Framework for Analysis
Thomas M. Eisenbach and Tanju Yorulmazer One of the major roles of banks and other financial intermediaries is to channel funds from savings into valuable projects. In doing so, banks engage in “liquidity and maturity transformation,” since they finance long-term, illiquid projects while funding themselves with short-term, liquid liabilities. By performing this important role, banks […]
February 10, 2014
The Transformation of Banking: Tying Loan Interest Rates to Borrowers’ Credit Default Swap Spreads
Banks’ practice of tying loan interest rates to borrowers’ credit default swap (CDS) spreads constitutes one of the most recent financial innovations.
January 15, 2014
Why Do Banks Feel Discount Window Stigma?
Olivier Armantier Even when banks face acute liquidity shortages, they often appear reluctant to borrow at the New York Fed’s discount window (DW) out of concern that such borrowing may be interpreted as a sign of financial weakness. This phenomenon is often called “DW stigma.” In this post, we explore possible reasons why banks may […]
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