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Financial Intermediation

Economists in the Financial Intermediation Function conduct research and policy-oriented analysis on a wide range of issues relating to financial intermediation and financial markets, including the behavior and health of financial institutions, innovations in financial markets, and the development of appropriate supervisory tools and techniques.

New from Liberty Street Economics

The Minimum Balance at Risk: A Proposal to Stabilize Money Market Funds Money market funds are vulnerable to runs that can harm investors and the financial system. Cipriani et al. propose a way to reduce, and possibly eliminate, the incentive for investors to run from a troubled fund. By Marco Cipriani, Michael Holscher, Antoine Martin, and Patrick McCabe

Data

Banking Research Datasets The Federal Reserve Bank of New York would like to announce the publication of a historical mapping between CRSP PERMCO (R) and the regulatory entity code for banks and bank holding companies. This data set is available for download free of charge for public use. In lieu of using this link, researchers are typically forced to hand-match market data to regulatory data on the basis of institution name. Unfortunately, this process is time-consuming and mistake-prone. This data set is provided as a public service in order to reduce the time costs of using market data in banking research and to make it easier for researchers to replicate existing research.

Recent Articles

Doing Well by Doing Good? Community Development Venture Capital The authors take a systematic look at the performance and social impact of community development venture capital funds, using a sample of 65,000 venture capital investments in the United States between 1996 and 2009. By Anna Kovner and Josh Lerner, Staff Reports 572, September 2012

Intermediary Leverage Cycles and Financial Stability The authors develop a dynamic stochastic general equilibrium (DSGE) model that captures the leverage cycle of financial intermediaries and the relation between asset returns and intermediary leverage in an empirically relevant way. By Tobias Adrian and Nina Boyarchenko, Staff Reports 567, August 2012

Market Declines: What Is Accomplished by Banning Short-Selling? Short-selling bans imposed in 2008 failed to stem the decline of U.S. stock prices during the financial crisis. In addition, the bans had the unwanted effects of reducing market liquidity and raising trading costs. By Robert Battalio, Hamid Mehran, and Paul Schultz, Current Issues in Economics and Finance 18 (5), August 2012

The Minimum Balance at Risk: A Proposal to Mitigate the Systemic Risks Posed by Money Market Funds The authors use new U.S. Treasury and SEC data on money market fund losses to calibrate a "minimum balance at risk" rule to reduce the vulnerability of the funds to runs and protect investors who do not redeem quickly in crises. By Patrick E. McCabe, Marco Cipriani, Michael Holscher, and Antoine Martin, Staff Reports 564, July 2012

The Evolution of Banks and Financial Intermediation: Framing the Analysis The authors frame the analysis for the Research Group’s broad investigation into the transformation of banks and their roles in financial intermediation under a new lending model centered on securitization. By Nicola Cetorelli, Benjamin Mandel, and Lindsay Mollineaux, Economic Policy Review, July 2012

Regulation's Role in Bank Changes Regulatory decisions in the past thirty to forty years have helped drive financial innovation, contributing to the development of the modern credit intermediation system and reshaping the role of banks. By Peter Olson, Economic Policy Review, July 2012