D uring the early 1990s bank examiners were frequently accused of being too strict with banks in New England, thereby contributing to a credit crunch in the region.1 If supervisors of New England banks were being unusually strict, they may have been reacting to public complaints of lax supervision of the savings and loan industry in the 1980s. Such complaints were rife as New England banks’ loa...

This paper studies the interconnectedness of banks in the syndicated loan market as a major source of systemic risk. We develop a set of novel measures to describe the "distance" (similarity) between two banks’syndicated loan portfolios and find that such distance explains how banks are interconnected in this market. As lead arrangers choose to work with those that have a similar focus in terms...

Lending officers (LOs) assess loan applications under conditions characterized by shifts in economic climate, wavering public credibility for banks and greater industry regulation. This paper examines the extent to which, in such an economic environment, the LOs’ assessment of commercial loan applications may be defensive, and, if so, which mechanisms that may trigger defensive loan assessment ...

Foreign banks play a large role in the loan sales market. We examine this role using individual bank data on foreign-owned banks in the United States. We find that the motives for loan sales and purchases differ between U.S. and foreign-owned banks and between foreign banks of different regions. The evidence is consistent with foreign banks' using the market for diversification. clevelandfed.or...

This paper analyzes the theoretical underpinnings of high-frequency repayment, a feature in nearly all microfinance contracts that has been largely overlooked by theorists. The pervasive belief among practitioners that frequent repayment is critical in achieving high repayment rates is puzzling. Classically rational individuals should benefit from more flexible repayment schedules, and less fre...