Journal of Money, Credit & Banking

Reports major findings in the study of financial institutions, financial markets, monetary and fiscal policy, credit markets, money and banking.

Articles from Vol. 32, No. 3, August

Banking Crises and Bank Rescues: The Effect of Reputation
IN THE 1980S AND 1990S banking-sector problems, frequently escalating to crisis level, have become common. Lindgren et al. (1996) estimated that in the decade and a half to the early 1990s over 130 countries experienced some degree of financial difficulty....
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Comparing Market and Supervisory Assessments of Bank Performance: Who Knows What When?
ALL CORPORATIONS OPERATE under governance systems designed to reduce agency problems among shareholders, debtholders, and managers. The various principals' ability to obtain timely and accurate information about firm condition importantly affects the...
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Deposit Insurance and Lender-of-Last-Resort Functions
[T]here are two rules. First. That these [discount] loans should only be made at a very high rate of interest.... Secondly, That at this rate these advances should be made on all good banking securities, and as largely as the public ask for them. ...
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Does a Bias in FOMC Policy Directives Help Predict Intermeeting Policy Changes?
EVERY SIX WEEKS OR SO, the Federal Open Market Committee (FOMC) meets to decide on the short-run course of monetary policy. At the end of the meeting, the FOMC issues a directive that indicates whether policy will be eased, tightened, or unchanged....
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Financial Fragility and Mexico's 1994 Peso Crisis: An Event-Window Analysis of Market-Valuation Effects
FINANCIAL-SECTOR CRISES have been a common feature in many developing countries. Cycles of currency devaluation, sovereign default crisis and financial-sector difficulties have been persistent. In a recent episode, Mexico was forced to devalue its...
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Household Credit and the Monetary Transmission Mechanism
THE MONETARY TRANSMISSION MECHANISM has received much theoretical and empirical attention in the recent macroeconomic literature. While many empirical studies find that (i) there is a negative contemporaneous correlation between monetary shocks and...
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Incentives for Banking Megamergers: What Motives Might Regulators Infer from Event-Study Evidence?
FINANCIAL INSTITUTION MERGERS and acquisitions are dramatically remolding at least five dimensions of U.S. and global banking competition. Dimensions changing most markedly include the number of leading players, their product lines, their front-office...
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Interest Rates, Inflation, and Federal Reserve Policy since 1980
INFLATION IN THE UNITED STATES, after rising throughout the 1960s and 1970s, fell sharply from its peak in the early 1980s and has remained low and stable since then. Figure 1 shows that this great decline in inflation was accompanied, at first, by...
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International Lending by U.S. Banks
A COMMON PHENOMENON is that the decisions of some individuals are influenced by what others have already done. From a Bayesian perspective, it is not surprising that the actions of those who go first, the leaders, are often mimicked by those who follow...
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Introduction
DELICATELY BALANCING THEIR BRIE, Chablis, and whole wheat crackers, two young economists from different continents are having a spirited discussion about off-the-equilibrium-path consequences of Intuitive Criterion refinements. Though at first glance...
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Liquidity and Risk Management
THIS PAPER IS CONCERNED with the corporate demand for liquidity and the various ways in which firms in the real and the financial sectors manage their liquidity needs so as to be able to carry out production and investment plans effectively without...
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Opening Remarks
The Bank annually sponsors this conference to advance knowledge of, and focus attention on, topics of substantial importance to central banks. Our practice has been to feature monetary policy issues in even-numbered years and financial policy issues...
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Perfect Competition and the Effects of Energy Price Increases on Economic Activity
POPULAR DISCUSSION often refers to energy price increases as shocks, shocks that are in some sense equivalent to adverse technology shocks and, thus, induce significant contractions in economic activity. In fact, using U.S. data (1953-1984), Hall (1988,...
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Political Regime Change and the Real Interest Rate
THOUGH THE DETERMINATION of real interest rates has important implications for macroeconomic and financial models, there is little professional consensus about what factors significantly influence real rates. The empirical literature has evolved from...
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Systemic Risk, Interbank Relations, and Liquidity Provision by the Central Bank
THE POSSIBILITY OF A SYSTEMIC CRISIS affecting the major financial markets has raised regulatory concern all over the world. Whatever the origin of a financial crisis, it is the responsibility of the regulatory body to provide adequate fire walls for...
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The Cyclical Relationship between Output and Prices: An Analysis in the Frequency Domain
THE CYCLICAL BEHAVIOR of the price level and its implications for evaluating macroeconomic models have recently been subjects of controversy. Dating at least as far back as Burns and Mitchell (1946), it has been taken as an established point of fact...
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Who Should Act as Lender of Last Resort? an Incomplete Contracts Model
COMMERCIAL BANKS ARE INSTITUTIONS that typically have a large proportion of their assets in the form of illiquid bank loans and a large proportion of their liabilities in the form of deposits callable on demand. With this balance sheet structure, a...
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