#2009-054A "Are U.S. Banks too Large?"
by David C. Wheelock, and Paul Wilson
October 2009

The substantial consolidation of the U.S. banking industry since the mid-1980s has brought a large increase in average (and median) bank size, which along with concerns about banks that are “too-big-to-fail,” has led many analysts to wonder whether banks are “too large.” More...

#2009-011B "U.S. Commercial Bank Lending through 2008:Q4: New Evidence from Gross Credit Flows"
by Silvio Contessi, and Johanna Francis
March 2009
Revised April 2009

What was hiding behind the aggregate commercial bank loans through the end of 2008? We use balance sheet data for every insured U.S. commercial bank from 1999:Q1 to 2008:Q4 to construct credit expansion and credit contraction series and provide new evidence on changes in lending. More...

#2009-008A "Robust, Dynamic Nonparametric Benchmarking: The Evolution of Cost-Productivity and Efficiency Among U.S. Credit Unions"
by David C. Wheelock, and Paul Wilson
March 2009

This paper develops a new methodology for estimating cost-productivity and efficiency change that benchmarks the performance of individual firms against an estimated α-quantile. More...

#2008-033A "Are Credit Unions Too Small?"
by David C. Wheelock, and Paul Wilson
September 2008

Since 1985, the share of U.S. depository institution assets held by credit unions has nearly doubled, and the average (inflation-adjusted) size of credit unions has increased over 600 percent. We use a non-parametric local-linear estimator to estimate a cost relationship for credit unions and derive estimates of ray-scale and expansion-path scale economies. More...

#2008-024B "The Loan Structure and Housing Tenure Decisions in an Equilibrium Model of Mortgage Choice"
by Matthew Chambers, Carlos Garriga, and Don Schlagenhauf
June 2008
Revised January 2009

The objective of this paper is to understand how loan structure affects (i) the borrower’s selection of a mortgage contract and (ii) the aggregate economy. We develop a quantitative equilibrium theory of mortgage choice where households can choose from a menu of long-term (nominal) mortgage loans. More...

PUBLISHED: Review of Economic Dynamics, July 2009, 12(3), pp. 444-68

#2008-006C "The Dynamic Interaction of Trading Flows, Macroeconomic Announcements and the CAD/USD Exchange Rate: Evidence from Disaggregated Data"
by Nikola Gradojevic, and Christopher J. Neely
February 2008
Revised August 2009

We explore the relationship between disaggregated trading flows, the Canada/U.S. dollar (CAD/USD) market and U.S. macroeconomic announcements with a novel data set of unprecedented breadth and length. Data Appendix. More...

#2007-044C "Lending to Uncreditworthy Borrowers"
by Rajdeep Sengupta
October 2007
Revised November 2009

How might a low cost of funds prompt lenders to include uncreditworthy borrowers in their loan portfolio? This paper presents a theoretical study into how lender competition can affect borrower quality, especially when the cost of funds is low. Appendix More...

#2007-017A "Affiliated Mutual Funds and Analyst Optimism"
by Simona Mola, and Massimo Guidolin
April 2007

Prior studies have shown that investment banking affiliations place pressure on analysts to produce optimistic recommendations on the investment bank’s stock-clients. More...

FORTHCOMING: Journal of Financial Economics

#2007-011A "Handicapping Currency Design: Counterfeit Deterrence and Visual Accessibility in the United States and Abroad"
by Marcela M. Williams, and Richard G. Anderson
March 2007
Revised June 2007

Despite the increasing use of electronic payments, currency retains an important role in the payment system of every country. In this article, the authors compare and contrast tradeoffs among currency design features, including those primarily intended to deter counterfeiting and ones to improve usability by the visually impaired. More...

PUBLISHED: Federal Reserve Bank of St. Louis Review, September/October 2007, 89(5), pp. 371-414

#2007-007A "Social Learning and Monetary Policy Rules"
by Jasmina Arifovic, James Bullard, and Olena Kostyshyna
March 2007

We analyze the effects of social learning in a widely-studied monetary policy context. More...