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The article reports that i n March 2020, commercial paper markets experienced disruptions related to the outbreak of COVID-19 and its associated shutdowns. Investor flows out of money market funds were exacerbated by uncertainty about the impact of COVID-19 on businesses. Anecdotally, commercial paper investors were unwilling to extend credit to issuers except at very short maturities (less than five days).

The article presents a study which focuses on the Commercial Paper Funding Facility (CPFF) of the U.S. Federal Reserve System, as well as the economic role of the commercial paper market. It says that the commercial paper market is being used by commercial banks and financial institutions to acquire short-term external funding. It also mentions that the CPFF was designed to provide additional source of funding to institutions in order to minimize the reinvestment risk.

Since its inception in the early nineteenth century, the U.S. commercial paper market has grown to become a key source of short-term funding for major businesses, with issuance averaging over $100 billion per day. In the fall of 2008, the commercial paper market achieved national prominence when increasing market stress caused some to fear that, given its size and importance, the market's failure would sharply worsen the recession. The Department of the Treasury and Federal Reserve enacted programs targeted at providing credit and liquidity to restore investor confidence. The authors review the history of the commercial paper market, describe its structure and key relationships to money market mutual funds, and present a detailed discussion of the crisis in the market, including the resulting Federal Reserve programs. [ABSTRACT FROM AUTHOR]

Presents a list of working papers from the Federal Reserve Bank of Saint Louis, Missouri in 2003. "Asymmetric Common Trends: An Application of Monetary Policy in a Markov-Switching VECM," by Neville Francis and Michael T. Owyang; "FOMC Forecasts: Is All the Information in the Central Tendency?," by William T. Gavin; "Does Consumer Sentiment Predict Regional Consumption?," by Thomas A. Garrett.

What is the impact of large swings in economic policy on the risk-return trade-off faced by i nvestors? What is the impact of changes in policy regimes on investment strategies? In this paper we study the impact on returns of switches between periods of market-friendly economic policies and periods of populist policies. To quantify the impact of policy instability, we use data from Argentina--a country that has experienced frequent and very large regime changes--and find that the risk-return for individual assets and minimum variance portfolios are quite different across regimes. We then develop a dynamic model to understand optimal portfolios when investors are cognizant that regimes can change. We find that when portfolios are unrestricted, it is optimal for investors to take a large amount of risk. On the other hand, when portfolios are restricted to include only long positions, a real asset (real estate) dominates financial assets. [ABSTRACT FROM AUTHOR]

The article presents research paper on using and disposing paper and electronic payment instruments. It states that the paper examines data from the Federal Reserve Bank of Boston's 2008 Survey of Consumer Payment Choice (SCPC), which highlights comprehensive and detailed information on consumer's payment choice. Moreover, it notes that the data presented in the SCPC suggest that the range of payment instruments adopted and regularly used by African Americans is narrower that of Caucasians.

Presents an overview and summary of papers presented at the conference held at the Federal Reserve Bank of New York which tackled issues regarding disclosure and market discipline in the banking industry. Interaction between supervisor examinations and market discipline; Relationship between bank disclosure and stock price volatility; Indicators for the determination of troubled banks.

Presents several working papers from the Federal Reserve Bank of Saint Louis, Missouri which contain preliminary results of staff research as of 2002.

Presents several working papers from the Federal Reserve Bank of Saint Louis that contain preliminary results of staff research made available to encourage comment and discussion. Some of the 1997 working papers; The 1996 working papers; More.

Discusses the commercial paper market, wherein corporations and foreign governments issue short-term unsecured promissory notes. Importance of the market; Characteristics and features of commercial paper; Major market participants; Risks and risk control; Asset-backed commercial paper; Swaps; Global market.

Compares the social costs and benefits of electronic cash presentment (ECP) with trunctuation to those of paper check collection. Description details associated with check trunctuation; Analysis on why the private market has not yet already transformed the check payment system to trunctuation. INSET: Key terms..

Lists the working papers from the Federal Reserve Bank of Saint Louis, Missouri containing preliminary results of staff research from 1991 to 1996. Includes `Discount Rate Policies of Five Federal Reserve Chairman,' by Daniel L. Thornton; `Dependent Children and Aged Parents: Funding Education and Social Security in an Aging Economy,' by Patricia S. Pollard and Rowena A. Pecchenino.

Presents a list of working papers submitted to the Federal Reserve Bank of St. Louis in Saint Louis, Missouri from 1991 to 1995. Includes `Dependent Children and Aged Parents: Funding Education and Social Security in an Aging Economy,' by Patricia S. Pollard and Rowena A. Pecchenino; `The Baby Boom and Economic Growth,' by Peter S. Yoo; `The P-Star Model and Austrian Prices,' by John A. Tatom.

The article discusses a research on the possibility that financial analysts are able to foretell the large volume of losses in 2007 and 2008, from housing investment in the U.S. The researchers examined information on high-risk mortgage loans taken out in 2005 that gave a clue to the housing crisis. The financiers failed to forecast the decrease of house prices and the increase in the volume of borrowers who reneged on their loan payments due to the economic recession.

Introduces a series of articles on economics and other related topics.

An introduction is presented in which the editor discusses various reports within the issue on topics including statistical or technical research, analysis on topics of current interest concerning the economy, and research on economic and policy issues of concern to New England.

Lists research papers dealing with economics and finance issues. Includes `A Simple Model of Conflicting Horizons,' by S. Brock Blomberg; `Explaining the Growing Gap Between Low-Skilled and High-Skilled Wages,' by David Brauer and Susan Hickok; `Perspectives on U.S. External Deficits,' by M.A. Akhtar.

The article introduces a method for computing equilibrium in dynamic heterogeneous-agent economies by including an entire distribution if finite-dimensional or a fine approximation if it is infinite-dimensional, as a state variable. Topics covered include the capability of the model in accurately computing equilibrium, the feasibility of the model for an economy where households face occasionally binding constraints, and the application of Smolyak's algorithm presented in the paper.

As the share of all income going to the top 1 percent has risen over the past four decades, so has the share of top incomes coming from labor income relative to capital income. The rise in labor income is mainly due to the explosion in executive compensation over the same period--mostly because of the increase in executives being paid with stocks, options, and bonuses. The principal-agent model explains the reason for such compensation instead of a flat salary. Yet hundreds of papers in economics, finance, accounting, and management have reached no consensus on whether executive compensation is efficient or whether empirically it conforms to the prediction of the principal-agent theory. In this article, we argue that this lack of consensus is due to two issues: The first is a measurement issue, and the second is that the exact prediction of the principal-agent model depends on many objects unobservable to the econometrician. We illustrate how using theory-based estimation together with a model-motivated measure of total compensation can help overcome these issues. Finally, using a model-consistent measure of compensation and theory-based estimation, we conclude that executive compensation broadly conforms to the principal-agent theory; however, each situation and the variables used have to be carefully modeled, identified, and estimated. [ABSTRACT FROM AUTHOR]

The article focuses on the changes in the U.S. retail payments including rise in the debit and credit card payment value. It discusses the increase in Automated Clearing House (ACH), increase in cash, as technological innovations are making security of debit and credit cards readily available, and economists suggesting elimination of paper currency.

This paper studies how local policies-specifically, taxes on income with redistributive goals-affect the migration decisions of individuals and, in turn, how these migration decisions affect local and economy-wide tax and redistribution policies. The author develops a model of optimal taxation for a federal system of governments in the tradition of Mirrlees (1971), where taxes can be fully nonlinear but informational asymmetries prevent the equalization of well being across workers due to informational rents. This article extends the large literature on federalism and tax competition by obtaining optimal tax formulas for the federal and state governments. The literature has mainly focused on inefficiencies that arise due to fiscal externalities when governments have access to restricted instruments (for example, allowing only linear taxes). Contrary to previous results in that literature, the author shows here that state governments will provide redistribution through taxes and that, in a symmetric equilibrium, the overall tax schedule that combines the actions of both the federal and state governments is the same as that of a unitary government. This implies that, under the conditions analyzed in the model, there is no reason to restrict income redistribution objectives to the federal government only, as commonly prescribed in the literature. [ABSTRACT FROM AUTHOR]

The U.S. labor market contracted sharply during the Great Recession. The ensuing recovery has been sluggish and by some measures still incomplete. In this paper, we break down aggregate employment during the Recession and the recovery into changes across industries and occupations. There is a clear asymmetric pattern: The contraction is driven by sectors and the recovery by occupations. In particular, the contraction between 2008 and 2010 primarily reflects a steep decline in construction employment, partially mitigated by expansions in the food services, education, and health industries. The recovery first came from a gradual increase in low-skill occupation employment across all sectors but after 2012 from a pronounced increase in high-skill occupation employment across all sectors. This pattern of recovery is a continuation of the underlying trend of polarization across occupations, which commenced in the 1980s. [ABSTRACT FROM AUTHOR]

In the mid-2000s, household private debt reached a new level 1.2 times larger than personal income- before collapsing during the Great Recession. This paper uses microeconomic data to document the main changes in personal debt and explore the behavior of debt across generations over two periods: before and after the Great Recession. Special emphasis is placed on participation rates by category of debt (the extensive margin), volume borrowed (the intensive margin), and default behavior. Key findings include that between 1999 and 2013 the fraction of individuals with only unsecured (e.g., credit card) debt decreased, as did their balances. In addition, most forms of private debt (mortgages, credit card debt, and auto loans) had significant boom-bust cycles, but the effects across generations have been very asymmetric. [ABSTRACT FROM AUTHOR]

The European Central Bank (ECB) assigns greater weight to the role of money in its monetary policy strategy than most, if not all, other major central banks. Nevertheless, reflecting the view that the demand for money became unstable in the early 2000s, some commentators have reported that the ECB has "downgraded" the role of money demand functions in its strategy. This paper explains the ECB's monetary policy strategy and shows the considerable influence of Milton Friedman's contributions on the formulation of that strategy. The paper also provides new evidence on the stability of euro area money demand. Following a conjecture made by Friedman (1956), the authors assign a role to uncertainty in the money demand function. They find that although uncertainty is nonstationary and subject to wide swings, it is nonetheless mean reverting and has substantial effects on the demand for money. [ABSTRACT FROM AUTHOR]

This paper investigates the effectiveness of one of the Federal Reserve's unconventional monetary policy tools, the term auction facility (TAF). At issue is whether the TAF reduced the spread between the London interbank offered rate (LIBOR) rates and equivalent-term Treasury rates by reducing the liquidity premium embedded in LIBOR rates. This paper suggests that rather than reducing the liquidity premium in LIBOR rates, the announcement of the TAF increased the risk premium in financial and other bond rates because market participants interpreted the announcement by the Fed and other central banks as a sign that the financial crisis was worse than previously thought. Evidence is presented that supports this hypothesis. [ABSTRACT FROM AUTHOR]

The article presents research paper, which examines the differences that originate from estimating a forward-looking relationship when different model discipline are enforced on prospects. It states that paper considers a New Keynesian Phillips Curve (NKPC) with time-varying trend inflation. Moreover, it notes that the reason for the difference is that the closed form implements model-consistent restrictions on expectations that are not explicitly enforced in the Euler equation (DE) form.

This paper examines the role of community colleges in the U.S. higher education system and their advantages and shortcomings. In particular, it discusses the population of community college students and economic returns to community college education for various demographic groups. It offers new evidence on the returns to an associate's degree. Furthermore, the paper uses data from the National Survey of College Graduates to compare educational objectives, progress, and labor market outcomes of individuals who start their postsecondary education at community colleges with those who start at four-year colleges. Particular attention is paid to the Federal Reserve's Eighth District, the geographic area served by the Federal Reserve Bank of St. Louis. [ABSTRACT FROM AUTHOR]

Congestion at airports imposes large costs on airlines and their passengers. A key reason for congestion is that an airline schedules its flights without regard to the costs imposed on other airlines and their passengers. As a result, during some time intervals, airlines schedule more flights to and from an airport than that airport can accommodate and flights are delayed. This paper explores how a specific market-based proposal by the Federal Aviation Administration (FAA), which includes the use of auctions to determine the right to arrive or depart in a specific time interval at airports in the New York City area, might be used as part of a strategy to mitigate delays and congestion. By explaining the underlying economic theory and key arguments with minimal technical jargon, the paper allows those with little formal training in economics to understand the fundamental issues associated with the FAA's controversial proposal. Moreover, the basics of the proposed auction process, known as a combinatorial auction, and value capture are also explained. [ABSTRACT FROM AUTHOR]

The article discusses the 2008 Survey of Consumer Payment Choice (SCPC) program which examines the role of consumers during the transformation of payment's transaction from paper to electronic devices in the U.S. Findings of the survey reveal that their selection of payment instruments have increased from 4.2 to 5.1 in the year. It also indicates that 53% of them used electronic cards such as credit, debit and prepaid while 37% still utilized paper instruments.

This paper examines some of the more recent mortgage products now available to borrowers. The authors describe how these products differ across important characteristics, such as the down payment requirement, repayment structure, and amortization schedule. The paper also presents a model with the potential to analyze the implications for various mortgage contracts for individual households, as well as to address many current housing market issues. In this paper, the authors use the model to examine the implications of alternative mortgages for homeownership. The authors use the model to show that interest rate-adjustable mortgages and combo loans can help explain the rise-and fall-in homeownership since 1994. [ABSTRACT FROM AUTHOR]

This paper discusses the events surrounding the 2007-08 credit crunch. It highlights the period of exceptional macrostability, the global savings glut, and financial innovation in mortgage-backed securities as the precursors to the crisis. The credit crunch itself occurred when house prices fell and subprime mortgage defaults increased. These events caused investors to reappraise the risks of high-yielding securities, bank failures, and sharp increases in the spreads on funds in interbank markets. The paper evaluates the actions of the authorities that provided liquidity to the markets and failing banks and indicates areas where improvements could be made. Similarly, it examines the regulation and supervision during this time and argues the need for changes to avoid future crises. [ABSTRACT FROM AUTHOR]

This paper develops a generalization of the formulas proposed by Kuttner (2001) and others for purposes of measuring the effects of a change in the federal funds target on Treasury yields of different maturities. The generalization avoids the need to condition on the date of the target change and allows for deviations of the effective fed funds rate from the target as well as gradual learning by market participants about the target. The paper shows that parameters estimated solely on the basis of the behavior of the fed funds and fed funds futures can account for the broad calendar regularities in the relation between fed funds futures and Treasury yields of different maturities. Although the methods are new, the conclusion is quite similar to that reported by earlier researchers—changes in the fed funds target seem to be associated with quite large changes in Treasury yields, even for maturities of up to 10 years. [ABSTRACT FROM AUTHOR]

Monetary policy analysts often rely on rules of thumb, such as the Taylor rule, to describe historical monetary policy decisions and to compare current policy with historical norms. Analysis along these lines also permits evaluation of episodes where policy may have deviated from a simple rule and examination of the reasons behind such deviations. One interesting question is whether such rules of thumb should draw on policymakers' forecasts of key variables, such as inflation and unemployment, or on observed outcomes. Importantly, deviations of the policy from the prescriptions of a Taylor rule that relies on outcomes may be the result of systematic responses to information captured in policymakers' own projections. This paper investigates this proposition in the context of Federal Open Market Committee (FOMC) policy decisions over the past 20 years, using publicly available FOMC projections from the semiannual monetary policy reports to Congress (Humphrey-Hawkins reports). The results indicate that FOMC decisions can indeed be predominantly explained in terms of the FOMC's own projections rather than observed outcomes. Thus, a forecast-based rule of thumb better characterizes FOMC decisionmaking. This paper also confirms that many of the apparent deviations of the federal funds rate from an outcome-based Taylor-style rule may be considered systematic responses to information contained in FOMC projections. [ABSTRACT FROM AUTHOR]

Many predictions of the economic and social costs of a modern-day pandemic are based on the effects of the influenza pandemic of 1918. Despite killing 675,000 people in the United States and 40 million worldwide, the influenza of 1918 has been nearly forgotten. The purpose of this paper is to provide an overview of the influenza pandemic of 1918 in the United States, its economic effects, and its implications for a modern-day pandemic. The paper provides a brief historical background as well as detailed influenza mortality statistics for cities and states, including those in the Eighth Federal Reserve District, that account for differences in race, income, and place of residence. Information is obtained from two sources: (i) newspaper articles published during the pandemic and (ii) a survey of economic research on the subject. (JEL I1, N0, R0) [ABSTRACT FROM AUTHOR]

The author comments on the paper by Gaetano Antinolfi et al on a macroeconomic model with heterogenous agents in which incomes fluctuate, aggregate income remains constant and frictions inhibiting the strict enforcement of private contracts place endogenous limits on agents' ability to borrow and lend and engage in intertemporal trade. He asserts that the paper was the first to consider the important distinction between active and passive monetary policy rules in a heterogenous-agent model.

Personal bankruptcy filings in the United States increased, per capita, nearly 350 percent between 1980 and 2005. This paper first addresses the changes in economic and institutional factors that have occurred over the past 100 years, many of which have occurred in the past 30 years, which are likely contributors to the dramatic rise in personal bankruptcy filings seen across the country. These factors include a reduction in personal savings, an increase in consumer debt, the proliferation of revolving credit, changes to bankruptcy law, and a reduced social stigma associated with filing for bankruptcy. Given the availability of bankruptcy data at various levels of aggregation, the remaining sections of the paper contain results from several different empirical analyses of bankruptcy filings using various data sets. Careful attention is paid to personal bankruptcy filings in counties located in Eighth Federal Reserve District states. [ABSTRACT FROM AUTHOR]

Is the United States bankrupt? Many would scoff at this notion. Others would argue that financial implosion is just around the corner. This paper explores these views from both partial and general equilibrium perspectives. It concludes that countries can go broke, that the United States is going broke, that remaining open to foreign investment can help stave off bankruptcy, but that radical reform of U.S. fiscal institutions is essential to secure the nation's economic future. The paper offers three policies to eliminate the nation's enormous fiscal gap and avert bankruptcy: a retail sales tax, personalized Social Security, and a globally budgeted universal healthcare system. [ABSTRACT FROM AUTHOR]

Expectations of the future play a large role in macroeconomics. The rational expectations assumption, which is commonly used in the literature, provides an important benchmark, but may be too strong for some applications. This paper reviews some recent research that has emphasized methods for analyzing models of learning, in which expectations are not initially rational but which may become rational eventually provided certain conditions are met. Many of the applications are in the context of popular models of monetary policy. The goal of the paper is to provide a largely nontechnical survey of some, but not all, of this work and to point out connections to some related research. [ABSTRACT FROM AUTHOR]

The trend toward incorporating information derived from financial markets into the bank supervision process has gained momentum over the past several years. This in part reflects an evolution in the thinking about how private market information can contribute to the process. In light of the evolving view of the potential contributions of market information, this paper reviews the empirical evidence relevant to the usefulness of financial market information in the bank supervision process. This paper reviews the research on what information can be gleaned from the pricing of equity and debt securities issued by banking organizations. The weight of the research leaves little room for doubt that financial market signals reflect underlying bank risk and that market evaluations of the risk of individual banking organizations are strongly correlated with supervisory findings. The evidence on the extent to which market signals can augment the information set of bank supervisors is more subtle, but overall it demonstrates that financial market signals should play a role in the bank supervision process. [ABSTRACT FROM AUTHOR]

This article is a summary of the papers presented at the Models of Monetary Economies II conference, hosted in May 2004 by the Federal Reserve Bank of Minneapolis and the University of Minnesota. It focuses on several themes in the papers, including the microfoundations of monetary theory, optimal monetary policy, and the role of banking, and also overviews how the contributions fit together. Finally, the article comments on monetary theory in general--how it has evolved and where it may be headed. [ABSTRACT FROM AUTHOR]

Svensson (2003) argues strongly that specific targeting rules--first-order optimality conditions for a specific objective function and model--are normatively superior to instrument rules for the conduct of monetary policy. That argument is based largely on four main objections to the latter, plus a claim concerning the relative interest-instrument variability entailed by the two approaches. The present paper considers the four objections in turn and advances arguments that contradict all of them. Then, in the paper's analytical sections, it is demonstrated that the variability claim is incorrect, for a neo-canonical model and also for a variant with one-period-ahead plans used by Svensson, providing that the same decisionmaking errors are relevant under the two alternative approaches. Arguments relating to general targeting rules and actual central bank practice are also included. [ABSTRACT FROM AUTHOR]

Comments on a paper by Robert G. King and Mau-Ting Lin published in this same issue which analyzes the desirability of various interest rate rules in a standard model of sticky prices. Types of shocks considered by King and Lin; Monetarist concerns discussed by the paper; Way in which the inflation-rule only destabilizes output.

Comments on a paper by James D. Hamilton, published in this same issue which argues that a linear statistical model with homoskedastic errors cannot capture the nineteenth-century notion of a recurring cyclical pattern in key economic aggregates. Questions raised by Hamilton in his paper; Dynamics of the unemployment rate according to Hamilton; Difference in empirical characterizations of the business cycle.

When taxing real property at the local level in the United States, land and improvements to the land, such as buildings, are generally taxed at the same rate. Two-rate (or split-rate) taxation departs from this practice by taxing land at a higher rate than structures. This paper begins with an elementary discussion of taxation and the economic rationale for two-rate taxation. In theory, moving to a two-rate tax reduces the deadweight losses associated with distortionary taxation and generates additional economic activity. The paper also provides a history of two-rate taxation in the United States and a summary of studies attempting to quantify its economic effects. Discussions of the practical and political challenges of implementing two-rate taxation complete the paper. [ABSTRACT FROM AUTHOR]

In this paper, the author develops and uses an original dataset collected from the internal discussion of the Federal Reserve's monetary policy committee (the Federal Open Market Committee [FOMC] transcripts) to examine questions about the Committee's behavior. The data show that Chairman Alan Greenspan's proposals, after Committee discussion, were nearly always adopted unmodified in the formal vote. Despite the external appearance of consensus with little disagreement over decisions and an official dissent rate of 7.5 percent, the data reveal that the rate of disagreement in internal Committee discussions was quite high-on the order of 30 percent for discussions of the short-term interest rate. And, under the assumption that FOMC voters assigned a higher priority to their preferences for the short-term interest rate than for the bias in the policy directive, it can be shown that this bias was important for achieving consensus, which supports and extends the results of Thornton and Wheelock (2000). Thus, the novel dataset described in this paper helps to shed some light on the internal workings of the FOMC in the Greenspan years. [ABSTRACT FROM AUTHOR]

Introduces four papers which appear in this issue of 'Economic Review,' all of which were presented at the Technology Growth, and the Labor Market conference sponsored by the Federal Reserve Bank of Atlanta and the Andrew Young School of Policy Studies at Georgia State University. Summarization of all the speeches, papers and disscussant comments which were presented at the conference.

During the housing bust many homeowners found themselves "underwater"--the amount they owed on their mortgages exceeded the value of the associated property--and they either could not or possibly chose not to stay current on their mortgage payments. As a consequence, sales of so-called distressed properties, often after a foreclosure, became commonplace. This spurred numerous research papers on various related issues. The authors' review summarizes the research findings on three topics: the impact of changes in housing prices on foreclosures; the impact of foreclosure on the sales price of the foreclosed house; and the impact of foreclosure on the sales prices of nearby houses. Not surprisingly, declining housing prices are associated with increasing foreclosure rates; however, various other factors, such as a job loss or expected housing prices, can also play an important role. This review highlights various theoretical and econometric issues that have raised doubts about the accuracy of estimated price impacts of foreclosures and led to numerous refinements of the subsequent empirical analysis. Estimates of the own foreclosure discount generally range from near zero to 28 percent, with most estimates greater than 12 percent. Estimates of the discount resulting from spillover effects of nearby foreclosed houses are generally less than 2 percent and diminish rapidly with distance. (JEL R31). [ABSTRACT FROM AUTHOR]

This paper investigates the effectiveness of forward guidance for the central banks of New Zealand, Norway, Sweden, and the United States. The authors test whether forward guidance improved market participants' ability to forecast future short-term and long-term rates relative to several benchmarks. They find some evidence that forward guidance improved market participants' ability to forecast short-term rates over relatively short forecast horizons for New Zealand, Norway, and Sweden but not the United States. However, the effects are typically small and frequently not statistically significant. Moreover, in no case are the results uniform across the benchmarks used. In addition, the authors find evidence of convergence of survey forecasters for New Zealand but less so for the other countries and no evidence of convergence for the United States. [ABSTRACT FROM AUTHOR]

Although interbank lending markets play a key role in the financial system, the lack of disaggregated data often makes the analysis of these markets difficult. To address this problem, recent academic papers focusing on unsecured loans of central bank reserves have employed an algorithm in an effort to identify individual transactions that are federal funds loans. he accuracy of the algorithm, however, is not known. he authors of this study conduct a formal test with U.S. data and find that the rate of false positives produced by one of these algorithms is on average 81 percent; the rate of false negatives is 23 percent. These results raise concerns about the information content of the algorithm's output. [ABSTRACT FROM AUTHOR]

Cites the effects of the economic turmoil in the securities markets on the borrowing practices of large corporations. Significance of commercial paper in short-term credits; Role of banks in supplying liquidity insurance for commercial paper; Rate of growth in large banks' commercial and industrial lending.