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A conference paper on the performance of corporate bonds in the U.S. during 1964 is presented. The author feels that the bond market will be affected by the economy overall, the growth of economic development, changes in the market, and market response. The author predicts that mortgage debt will increase as will borrowing by the U.S. Treasury because of a tax cut. Another prediction is that an overall increase in income will allow nonbank financial institutions to invest more money.

The article discusses an estimate of bank-administered personal trust funds previous to the article's publication in 1959. The authors state that the personal trust departments of commercial banks administer around 80 billion worth of personal trust funds. The estimates that are presented in the article are based on statements gathered from a small and varying number of large personal trust departments from the east coast of the U.S. Several tables are included to help illustrate the authors' study.

This article provides a critical analysis of the consistency of the standard approaches for market and credit risks under Solvency II and the current and forthcoming Basel III standards. The comparability is assessed both theoretically via a detailed comparison of the capital standards and in a numerical analysis that contrasts the capital charges for a stylized portfolio. Our examination reveals substantial discrepancies in the design of the frameworks. These lead to vastly differing capital requirements for the same risks. Moreover, the analysis indicates higher charges for banks than insurers, especially under the proposed new Basel III standard approaches. [ABSTRACT FROM AUTHOR]

This article contrasts the development of Japanese financial institutions over the past 50 years to that of the United States and compares the two countries' household savings behavior. Although reform and liberalization is driving the Japanese financial sector to become more open and more sophisticated, there are powerful reasons for the Japanese system and Japanese asset-holding behavior to remain divergent from that of the United States. One major factor is that income and wealth in Japan are distributed much more evenly than in the United States. Since wealthy households are more sophisticated and better able to accommodate risk, the concentration of wealth in the United States means that, compared to Japan, there are more high income/high wealth households that are willing to take on risk from equity and bond holdings. In Japan, in contrast, there is a much heavier reliance on bank deposits. Even though financial institutions in the two countries are becoming more similar, the persistent differences in income distribution are likely to lead to persistent differences in asset holding and the composition of capital markets in the two countries. [ABSTRACT FROM AUTHOR]

Economists both failed to predict the global financial crisis and underestimated its consequences for the broader economy. Focusing on the second of these failures, this paper makes two contributions. First, I review research since the crisis on the role of credit factors in the decisions of households, firms, and financial intermediaries and in macroeconomic modeling. This research provides broad support for the view that credit market developments deserve greater attention from macroeconomists, not only for analyzing the economic effects of financial crises but in the study of ordinary business cycles as well. Second, I provide new evidence on the channels by which the recent nancial crisis depressed economic activity in the United States. Although the deterioration of household balance sheets and the associated deleveraging likely exacerbated the initial economic downturn and the slowness of the recovery, I find that the unusual severity of the Great Recession was due primarily to the panic in funding and securitization markets, which disrupted the supply of credit. This finding helps to justify the government's extraordinary efforts to stem the panic in order to avoid greater damage to the real economy. [ABSTRACT FROM AUTHOR]

Economists both failed to predict the global financial crisis and underestimated its consequences for the broader economy. Focusing on the second of these failures, this paper makes two contributions. First, I review research since the crisis on the role of credit factors in the decisions of households, firms, and financial intermediaries and in macroeconomic modeling. This research provides broad support for the view that credit market developments deserve greater attention from macroeconomists, not only for analyzing the economic effects of financial crises but in the study of ordinary business cycles as well. Second, I provide new evidence on the channels by which the recent financial crisis depressed economic activity in the United States. Although the deterioration of household balance sheets and the associated deleveraging likely exacerbated the initial economic downturn and the slowness of the recovery, I find that the unusual severity of the Great Recession was due primarily to the panic in funding and securitization markets, which disrupted the supply of credit. This finding helps to justify the government's extraordinary efforts to stem the panic in order to avoid greater damage to the real economy. [ABSTRACT FROM AUTHOR]

The very inflationary economic conditions that have made home ownership attractive in recent years have caused mortgage lenders to reexamine their policies and offer alternatives to conventional fixed-rate mortgages. The author examines these efforts to restructure the mortgage market, including the variable-rate mortgage. [ABSTRACT FROM AUTHOR]

Individuals in the United States consistently do most of their saving through financial intermediaries, but over time there have been and continue to be major shifts in people's reliance on specific kinds of intermediary institutions. This paper assesses the potential effects on interest rates, and via interest rates (and asset prices and yields more generally) on nonfinancial economic activity, of four specific shifts in saving behavior: additional pension contributions financed by individuals, additional pension contributions financed by businesses, additional purchases of life insurance by individuals, and additional deposits in thrift institutions by individuals. The paper's results indicate that such shifts, in plausible magnitudes, would have significant effects not only on interest rates and asset-liability flows but also on both the level and the composition of nonfinancial economic activity. In particular, although the specific effects differ from one shift to another, each would disproportionately stimulate capital formation in comparison to other forms of spending. [ABSTRACT FROM AUTHOR]

The article examines the equity market in the United States during the period of 1951 to 1954 and the increase in institutional net purchases of equities with a focus on five sources of institutional financing. The financial institutions discussed are life insurance companies, property and liability insurance companies, open-end investment companies, self-insured pension funds, and bank-administered personal trust funds. Statistics include estimates of equity holdings, net equity purchases, and stock purchases relative to total new investment by the financial intermediaries. Factors contributing to the increased institutional-investment activity in postwar America and the percentage of institutional holdings in relation to the total market are mentioned.

The article presents a report from the U.S. National Bureau of Economic Research on a study that investigated capital and securities markets in the U.S. Several new areas for research were proposed, included among them the investment banking and securities businesses, investment holdings and flow of funds, pension funds, business financing policies, markets for government securities, security markets regulation, and the relationship between security/capital markets and economic vigor. Specifics for each are discussed.

The article discusses college revenue bonds. The author describes their history and details their increased usage since World War II, which has been aided by the growing receptiveness on the part of institutional investors to hold such securities. Legal considerations surrounding the bonds are reviewed, as are the various types of college projects financed by them. The author notes that revenue bonds make it possible for institutions of higher learning to commence capital projects they might otherwise not be able to afford.

U.S. money market mutual funds (MMFs) are an important source of dollar funding for global financial institutions, particularly those headquartered outside the United States. MMFs proved to be a source of considerable instability during the financial crisis of 2007-09, resulting in extraordinary government support to help stabilize the funding of global financial institutions. In light of the problems that emerged during the crisis, a number of MMF reforms have been proposed, which are analyzed in this paper. The paper assumes that the main goal of MMF reform is safeguarding global financial stability. In light of this goal, reforms should reduce the ex ante incentives for MMFs to take excessive risk and increase the ex post resilience of MMFs to system-wide runs. The analysis suggests that requiring MMFs to have subordinated capital buffers could generate significant financial stability benefits. Subordinated capital provides MMFs with loss absorption capacity, lowering the probability that an MMF suffers losses large enough to trigger a run, and reduces incentives to take excessive risks. Other reform alternatives based on market forces, such as converting MMFs to a floating net asset value, may be less effective in protecting financial stability. The analysis sheds light on the fundamental tensions inherent in regulating the shadow banking system. [ABSTRACT FROM AUTHOR]

The article discusses on financial institutions as a liable factor for financial crime under the Alien Tort Statute (ATS) of the U.S. Code. Topics include the United Nations' convention against corruption, the Organization for Economic Co-operation and Development's (OECD) convention on combating bribery of foreign public officials in international business transaction and the World Bank Sanctions Board's involvement in the global condemnation of financial fraud.

The article examines how commercial bank deposits and lending have evolved during the economic crisis compared with past episodes of financial stress in the U.S. It compares the 2007 to 2009 financial crisis with previous financial market disruptions and explores whether deposits and loans increased less at banks where deposits were more likely to be viewed as unsafe. It highlights that bank deposit funds cannot be assumed to be robust to any type of market liquidity stress.

The article focuses on the problem of financial innovation faced by the regulators and which has not been covered in the U.S. Dodd-Frank Wall Street Reform and Consumer Protection Act. It states that financial innovation allows financial firms to supply and borrow huge credit amounts which effects the U.S. financial system largely. It further discusses various demerits of this includes income inequality, bubble-prone economy and inflation in the asset classes.

The macro risk premium measures the threshold return for real activity that receives funding from savers. The balance sheet conditions of financial intermediaries provide a window on the macro risk premium. The tightness of intermediaries’ balance sheet constraints determines their “risk appetite,” which in turn, determines the set of real projects that receive funding, and hence determines the supply of credit. Monetary policy affects risk appetite by changing intermediaries’ ability to leverage their capital. This paper estimates the time-varying risk appetite of financial intermediaries for the United States, Germany, United Kingdom, and Japan, and studies the joint dynamics of risk appetite with macroeconomic aggregates for the United States. The paper argues that risk appetite is an important indicator for monetary conditions. [ABSTRACT FROM AUTHOR]

The article investigates the primary imbalances in our global economy, which have brought us to the brink of depression. Putting the emphasis on structural changes in our credit system following its deregulation in the 1980s, we can conclude that the confluence of financial innovation and financial globalization created a new propensity for speculative asset bubbles. When the latest bubble burst in 2007, it triggered a devastating sequence of financial instability which has driven the world economy into the worst downturn since the 1930s. Government crisis-management responses, from deficit spending to unorthodox monetary policy and bank rescues, are assessed. The global dimension of this crisis requires international policy coordination, a task made more difficult by the asymmetry of our dollar-based international monetary system encouraging excessive US deficits. [ABSTRACT FROM AUTHOR]

The underlying causes of sharp declines in bank lending during recessions in large developed economies, as exemplified by the U.S. in the early 1990s and Japan in the late 1990s, are still being debated due to the lack of any convincing identification strategy of the supply side capital–lending relationship from lending demand. Using within bank share of real estate lending in the late 1980s as an instrumental variable for bank capital, we find that Japanese banks cut back on their lending in response to a large loss of bank capital in fiscal year 1997. [ABSTRACT FROM AUTHOR]

Financial structure is an important determinant of the efficiency and stability of financial systems and the channels through which monetary policy is transmitted. We document the substantial differences in the financial systems of the euro area, the UK, the USA, Japan, and non-Japan Asia. The traditional classification of bank-based and market-based systems is shown to be too simplistic. We focus on two particular aspects of financial structure: financial institutions and the housing and mortgage markets. It is shown that institutional investors differ in important ways across the regions considered. One recent change is that Central Banks, particularly those in Asia, have become significant institutional investors. Housing and mortgage markets differ even more. We are still a long way from understanding which kind of financial structure is best. [ABSTRACT FROM PUBLISHER]

Focuses on developments in business lending by commercial banks in the U.S. Forms of credit at domestic commercial banks; Commercial credit policies; Factors affecting the demand for commercial and industrial (C&I) loans; Fluctuations in demand for C&I loans; Syndicated loan market; Financial institutions participating in the syndicated loan market.

Discusses the consequences of the September 11, 2001 terrorist attacks on U.S. financial markets. Analysis of the responses of firms and policy makers to the event; Information on the microfinance implications of the attacks; Details of the macrofinance implications of the attacks.

Presents the United States' domestic financial statistics as of July 2000. Reserves, money stock and debt measures; Open market transactions; Aggregate reserves of depository institutions and monetary base; Money stock and debt measures; Commercial banks; Government securities dealers; Federal and federally sponsored credit agencies; Security issues; Open-end investment companies.

Reports on the performance of the United States commercial banking industry in 1998. Decline in return on assets and return on equity; Growth in fee income; Decline in the rates banks earned on their interest-bearing assets relative to the rates they paid on their liabilities; Improvement of the profits of medium-sized banks.

Presents financial and business statistics in the United States, as of March 1999. Includes money stock and bank credit; Policy instruments; Monetary and credit aggregates; Commercial banking institutions; Financial markets; Securities markets and corporate finance.

Looks at the business cycle of financial institutions in the United States. Misused peaks and related errors in the business cycles; Causes of recessions; Markets, expectations and policies.

The article focuses on how the U.S. Treasury's bank reform proposals might alter the economic and financial system for the worse. The U.S. Treasury has recently put forth a series of proposals to modernize the financial system. Although the author agrees with the Treasury's stated goal to devise a regulatory environment that will help assure the long-term health of deposit institutions, the author has some differences with their recommendations. Over the last few years of severe financial adjustments, deposit institutions, both commercial banks and thrifts, have experienced great trauma. Some institutions have failed. Many others are still short of capital, have questionable assets, and are experiencing losses. A few commentators assert that deposit institutions as a class of financial intermediary have no future that in some sense they will become financial dinosaurs. Of course, extrapolating trends from the worst decade for banking since the 1930s is bound to produce dour expectations. But that exercise is essentially backward looking.

This article examines the changes that underlie the transformation of U.S. commercial banking in order to forecast the industry's future under nationwide banking. The article emphasizes regulatory changes and technical and financial innovations as the central driving forces behind the transformation of the industry. Changes in the regulatory environment include the deregulation of deposit accounts, several major changes in capital requirements, reductions in reserve requirements, expansion of bank powers and liberalization of geographic restrictions on intrastate and interstate banking. Important technical innovations that have affected the banking industry include the advances in information processing and telecommunications technologies that facilitate the low-cost, rapid transfer of information and funds that fuel modern financial markets. Innovations in applied finance include those that have allowed the securitization of many traditional bank assets and have expanded the scope and volume of financial derivative activity.

This article explores the viability of thrift institutions in the U.S. Recent trends in financial markets have stirred fears about the ability of thrift institutions in the United States -- savings and loan associations and mutual savings banks -- to survive and prosper. Although these institutions constituted the fastest growing segment of the financial system from 1947 to the mid-1960s, their spectacular prosperity has dimmed since then as markets have become increasingly volatile. More and more they have experienced deposit drains, and no relief seems in sight. Accordingly, many knowledgeable observers question the prospects of these institutions as now constituted and regulated. Virtually every plan for general reform of the financial system implicitly or explicitiy assumes some alteration in the powers of the thrift institutions if tiiey are not to sufFer serious deterioration. In the summer of 1973 and again in the summer of 1974 trends in market interest rates gave rise to great concern over the survival of these institutions. High interest rates on Treasury securities and tiie introduction of variable rate notes by bank holding companies punctuated an already bleak outlook for the thrift institutions. Deposits fiowed out of mutual savings banks at a rapid pace and savings and loan associations had months of net withdrawals -- a rarity for the industry. Never happy with any competition, thrift institutions were especially vehement in opposing high-yielding Treasury securities and variable rate notes, whuih they felt might generate pressure that their industry could not withstand.

This article focuses on the U.S. pension investment policy. The Clinton Administration is poised to challenge the current system of pension regulation to steer pension funds toward long-term investing. Though pension funds create serious short-term biases in capital markets, an entrenched set of propositions and guidelines that stem from "perfect capital market theory" or, more narrowly, "modern portfolio theory" supports current U.S. pension investment practices and regulatory policies. Perfect capital market theory views trading and investing as the same activity, because finance markets reward only firms with intrinsic worth, and no one trader is large enough to affect any asset's price. In seeking to change "attitudes," Olena Berg, the Clinton Administration's pension regulator, told a pension manager conference that companies which invest in developing the value of their human capital should, over the long term, perform better than their competitors, and that this superior performance will be reflected in stock prices.

Focuses on the nonmonetary effects of financial sector shocks on output and prices during the interwar period in the United States. Impact of financial shocks on aggregating economic activity; Financial factors affecting the macroeconomy; Importance of nonmonetary financial crisis.

This article describes an investigation of the "discriminatory" effects of tight money, which isolates these effects by studying the differential lending-investing policies during the 1955-57 period of "tight" banks in contrast with those of "loose" banks in the U.S. To measure the change in tightness between October 1955 and October 1957 two tests were initially applied. All individual banks were ranked by the decrease in the looseness ratio between October 1955 and October 1957. Banks were ranked according to the percentage increase in their deposits over the period. For the individual bank, as distinguished from the banking system, it is primarily gain or loss of deposits, which makes the bank looser or tighter for new lending and investing. The simplest measure of whether an individual bank is growing looser or tighter is the extent to which it is gaining or losing deposits. Banks with the greatest loss of deposits showed the greatest increase in tightness, with others ranked in order of deposit gain. The rank-order results for individual banks were similar using these two methods over the 1955-57 period. The change-in-deposits method both seemed more significant in explaining individual bank lending-investment behavior and offered a more sharply discriminating measure as among individual banks.

This financial model is characterized by three broad features. First, the model presupposes that financial markets can be analyzed by means of the flow of dollars passing through them in much the same way that non financial markets are analyzed in models using flows like consumption and investment. As a result, the model places less emphasis than is usual on price variables such as interest rates and on stock variables such as the quantity of money or liquid assets. Secondly, the choice of variables for the model is somewhat pragmatic. The variables are mainly financial market flows with large year-to-year movements during the post-World War II period. Finally, the model as a whole is built up from its parts. A number of sub models are first developed for various sectors, each describing the basic financial behavior of the sector. The model deals with the annual flows through four broad financial markets federal obligations, corporate securities, bank loans, and mortgages-and also with the change in cash balances.

An increasing proportion of the saving being done by Americans is flowing through savings institutions, and an increasing proportion is taking a contractual form. Theoretical discussion of investment assumes that decisions are made by individual investors, that is, the individual saves and then decides whether to hold his saving in cash or to buy a bond, a stock, or some other capital asset, and it is apparently assumed implicitly that decisions made by financial officers of institutions are but conglomerate decisions of a large number of individuals. Actually, the investment decisions which govern the corporate bond and mortgage market today, and to a large extent marketable government securities, are decisions made by financial officers of institutions. The investment decisions made by these financial officers are not at all made along the lines of the motivational pattern which theoretical discussion attributes to individuals. This has important implications for the theory of investment and for general economic theory, particularly interest-rate theory. It is also important for public policy that the motivating forces behind institutional investment are understood better.