Author(s):Greg Buchak, Gregor Matvos, Tomasz Piskorski & Amit Seru Date:February 2024 Abstract: The traditional model of bank-led financial intermediation, where banks issue demandable deposits to savers and make informationally sensitive loans to borrowers, has seen a dramatic decline since 1970s. Instead, private credit is increasingly intermediated through arms-length transactions, such as securitization. This paper documents[…]

Author(s):Claudia M. Buch, Linda S. Goldberg Date:March 2024 Abstract: Global liquidity flows are largely channeled through banks and nonbank financial institutions. The common drivers of global liquidity flows include monetary policy in advanced economies and risk conditions. At the same time, the sensitivities of liquidity flows to changes in these drivers differ across institutions and[…]

Author(s):Roland Beck, Antonio Coppola, Angus J. Lewis, Matteo Maggiori, Martin Schmitz & Jesse Schreger Date:March 2024 Abstract: We assess the pattern of Euro Area financial integration adjusting for the role of “onshore offshore financial centers” (OOFCs) within the Euro Area. The OOFCs of Luxembourg, Ireland, and the Netherlands serve dual roles as both hubs of[…]

Author(s):Matthew S. Jaremski, Steven Sprick Schuster Date:March 2024 Abstract: The lack of universal deposit insurance coverage can create liquidity risk during financial crises. This aspect of deposit insurance is hard to test in modern data because of the broad coverage of most systems. We, therefore, study the role that the U.S. Postal Savings System played[…]

Author(s):Viral Acharya, Nicola Cetorelli, Bruce Tuckman Date:March 2024 Abstract: In recent years, assets of non-bank financial intermediaries (NBFIs) have grown significantly relative to those of banks. These two sectors are commonly viewed either as operating in parallel, performing different activities, or as substitutes, performing substantially similar activities, with banks inside and NBFIs outside the perimeter[…]

Author(s):Sandra Eickmeier, Josefine Quast, Yves Schüler Date:March 2024 Abstract: We examine how natural disasters impact the US economy and financial markets using monthly data since 2000. Our analysis reveals large sustained adverse effects of disasters on overall economic activity, with significant implications across various sectors including labor, production, consumption, investment, and housing. Our findings suggest[…]

Author(s):Tommaso Gasparini, Vivien Lewis, Stéphane Moyen, Stefania Villa Date:March 2024 Abstract: Increases in firm default risk raise the default probability of banks while decreasing output and inflation in US data. To rationalize the empirical evidence, we analyse firm risk shocks in a New Keynesian model where entrepreneurs and banks engage in a loan contract and[…]

Author(s):Ezra Oberfield, Esteban Rossi-Hansberg, Nicholas Trachter & Derek T. Wenning Date:March 2024 Abstract: We study the spatial expansion of banks in response to banking deregulation in the 1980s and 90s. During this period, large banks expanded rapidly, mostly by adding new branches in new locations, while many small banks exited. We document that large banks[…]

Author(s):Victoria Ivashina, Ṣebnem Kalemli-Özcan, Luc Laeven, Karsten Müller Date:March 2024 Abstract: Using a new dataset on sectoral credit exposures covering financial and non-financial sectors in 115 economies over the period 1940–2014, we document the following evidence that corporate debt plays a key role in explaining boom-bust cycles, financial crises, and slow macroeconomic recoveries: (i) corporate[…]

Author(s):Charles W. Calomiris, Matthew S. Jaremski Date:March 2024 Abstract: The high social costs of financial crises imply that economists, policymakers, businesses, and households have a tremendous incentive to understand, and try to prevent them. And yet, so far we have failed to learn how to avoid them. In this article, we take a novel approach[…]