This is a story about a humorous bank ad that morphed into a promotional campaign. It’s a tale that shares themes with four previous Historical Echoes posts about Barbie, bank promotions, and bank tellers.
Look for our next post on September 19.
October 14, 2016
October 12, 2016
Let the Light In: How Financial Reporting and Transparency Improve Corporate Governance
Financial reporting is valuable because corporate governance—which we view as the set of contracts that help align managers’ interests with those of shareholders—can be more efficient when the parties commit themselves to a more transparent information environment. This is a key theme in our article The Role of Financial Reporting and Transparency in Corporate Governance, which reviews recent literature on the part played by financial reporting in resolving agency conflicts among managers, directors, and shareholders. In this post, we highlight some of the governance issues and recommendations discussed in the article, and we focus on how information asymmetries can create agency conflicts.
October 7, 2016
At the N.Y. Fed: Workshops and New Research on Improving Bank Culture and Governance
The New York Fed takes bank culture and governance seriously. As Bank President William Dudley said at a 2014 workshop convening policymakers and industry participants improving the culture and governance of banks is “an imperative,” both to ensure financial stability and to deepen public trust in our financial system. The Bank built on that first workshop with a second in November 2015 and will host a third event later this month, on October 20.
October 5, 2016
Why Did the Recent Oil Price Declines Affect Bond Prices of Non‑Energy Companies?
Oil prices plunged 65 percent between July 2014 and December of the following year. During this period, the yield spread—the yield of a corporate bond minus the yield of a Treasury bond of the same maturity—of energy companies shot up, indicating increased credit risk. Surprisingly, the yield spread of non‑energy firms also rose even though many non‑energy firms might be expected to benefit from lower energy‑related costs. In this blog post, we examine this counterintuitive result. We find evidence of a liquidity spillover, whereby the bonds of more liquid non‑energy firms had to be sold to satisfy investors who withdrew from bond funds in response to falling energy prices.
Posted at 7:00 am in Corporate Finance, Credit, Financial Markets, Inflation, Liquidity, Treasury, Unemployment | Permalink
October 3, 2016
Fear of $10 Billion
Ten billion has become a big number in banking since the Dodd-Frank Act of 2010. When banks’ assets exceed that threshold, they face considerably heightened supervision and regulation, including exams by the Consumer Financial Protection Bureau, caps on interchange fees, and annual stress tests. There are plenty of anecdotes about banks avoiding the $10 billion threshold or waiting to cross with a big merger, but we’ve seen no systematic evidence of this avoidance behavior. We provide some supporting evidence below and then discuss the implications for size-based bank regulation—where compliance costs ratchet up with size—more generally.
Posted at 7:00 am in Financial Institutions | Permalink
September 30, 2016
From the Vault: Does Forward Guidance Work?
This post takes a look at research assessing the effectiveness of forward guidance in monetary policy communications.
September 28, 2016
U.S. Real Wage Growth: Slowing Down With Age
In Monday’s post, we described the estimation of real wage growth rates for different cohorts of U.S. workers. Here, we turn our attention to estimating the effect of this demographic shift on the economy-wide average real wage growth rate.
September 26, 2016
U.S. Real Wage Growth: Fast Out of the Starting Blocks
Much has been written about the aging of the U.S. population, but the importance of this trend for the economy and its evolution can easily be overlooked. This week, we focus on the aging of the labor force and explore its implications for the behavior of real wage growth.
Posted at 7:00 am | Permalink
September 12, 2016
Is There Discount Window Stigma in the United Kingdom?
At the onset of the financial crisis in the summer of 2007, news that Barclays had borrowed from the Bank of England (BoE) received wide media coverage. This information triggered concerns that the BoE’s lending facility may have become stigmatized, prompting market participants to interpret borrowing from the BoE as a sign of financial weakness.
Posted at 7:00 am | Permalink
September 9, 2016
Who Falters at Student Loan Payback Time?
This is the final post in a four-part series examining the evolution of enrollment, student loans, graduation and default in the higher education market over the course of the past fifteen years.
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