Looking Back at 10 Years of Liberty Street Economics
The Banking Industry and COVID-19: Lifeline or Life Support?
By many measures the U.S. banking industry entered 2020 in a robust state. But the widespread outbreak of the COVID-19 virus and the associated economic disruptions have caused unemployment to skyrocket and many businesses to suspend or significantly reduce operations. In this post, we consider the implications of the pandemic for the stability of the banking sector, including the potential impact of dividend suspensions on bank capital ratios and the use of banks’ regulatory capital buffers.
How Does Supervision Affect Bank Performance during Downturns?

New research finds that there is a cyclical nature to the benefits of bank supervisory attention: in normal times, the benefits are smaller, but during downturns the more closely supervised banks exhibit better loan performance and lower earnings volatility.