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A country's payment system is what makes its real and financial markets work. When commodities are exchanged for cash, check, giro, credit card, or debit card payments-rather than for other [...]

This article presents a study which evaluates the potential for bank subordinated notes and debentures (SNDs) to impose market discipline by analyzing the default-risk premium on SNDs, and which seeks to determine whether the market discipline imposed is consistent with bank regulatory agency objectives. This study's methodology includes bank problem loans and measures the default premium on subordinated debt that allows for the debt's callability. The author concludes that risk premiums on long-term debt are unrelated to accounting measures of bank performance.

The Fair and Accurate Credit Transaction Act of 2003 (the FACT Act) directed several federal agencies to conduct studies related to the credit reporting industry. A primary concern was the accuracy and fairness of the credit reporting and scoring systems. In this article, Federal Reserve System Board economists report on a study in which they examined various issues related to credit scoring, including how credit scoring has affected the availability and affordability of credit. In a responding commentary, Calvin Bradford notes flaws and deficiencies in the Federal Reserve System study. [ABSTRACT FROM AUTHOR]

Highlights the results of a research relating to the proposals to revise the regulations that implement the Community Reinvestment Act (CRA) in the United States. Need for federally insured banking institutions to be evaluated on their records of helping to meet the credit needs of their local communities, including low- and moderate-income neighborhoods; Brief description of the CRA; Large- and small-institution evaluation; Agencies' proposals to amend the CRA regulations. INSETS: The Large-Institution Evaluation;The Small-Institution Evaluation.

This paper examines how bank consolidation activity affected small business lending in local U.S. banking markets during two 3-year study periods, focusing on the role played by community banks in the process. During the 1994-1997 period, we find that consolidation activity involving big banks is associated with lower loan growth, whereas community bank consolidations and a greater presence of community banks in the market are associated with higher loan growth. During the 1997-2000 period, consolidation activity is either unrelated to small business loan growth or is associated with higher loan growth. In both study periods we find that, net of organization reclassifications due to consolidation or asset growth, the share of small business lending funded by community banks rose, particularly in markets undergoing consolidation. [ABSTRACT FROM AUTHOR]