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In this paper, we exploit a natural experiment in which thrifts in several states witnessed an exogenous reduction in supervisory attention to assess the effect of supervision on financial institutions' willingness to take risk. We show that the affected institutions took on much more risk than...
Persistent link: https://www.econbiz.de/10011710132
We exploit an exogenous reduction in bank supervision to demonstrate a causal effect of supervisory resources on financial institutions' willingness to take risk. The additional risk took the form of more risky loans, faster asset growth, and a greater reliance on low quality capital. This...
Persistent link: https://www.econbiz.de/10012854511
We empirically test early monetary theories in which reserve creation plays a crucial role in the transmission of quantitative easing (QE). Analyzing the unprecedented injection of reserves across several Federal Reserve QE programs, we demonstrate a causal effect of bank-level reserve...
Persistent link: https://www.econbiz.de/10012855918
We empirically assess the effect of reserve accumulation as a result of quantitative easing (QE) on bank-level lending and risk taking activity. To overcome the endogeneity of bank-level reserve holdings to banks' other portfolio decisions, we employ instruments made available by a regulatory...
Persistent link: https://www.econbiz.de/10011803753
Persistent link: https://www.econbiz.de/10012546375
Persistent link: https://www.econbiz.de/10010462779
In this study, I model the predictors and manifestations of bank stress during the financial crisis using a Multiple Indicator Multiple Cause model. Unlike most early warning models that predict failure probabilities, this paper develops a framework for predicting a broader notion of bank stress...
Persistent link: https://www.econbiz.de/10013058624