Assessing the Resiliency of Non-DFAST Banks to a Financial Shock

FEDS Notes ◽  
2020 ◽  
Vol 2020 (2514) ◽  
Author(s):  
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Kevin F. Kiernan ◽  
Cindy M. Vojtech ◽  
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Keyword(s):  
2016 ◽  
Vol 20 (6) ◽  
pp. 1527-1549 ◽  
Author(s):  
Keiichiro Kobayashi ◽  
Daichi Shirai

This paper presents a simple model of an economy with heterogeneous agents to show that the redistribution of wealth among such agents can play a significant role in the propagation mechanism of financial crises. In an economy where firms with heterogeneous productivity operate under borrowing constraints, the redistribution reproduces hump-shaped responses for output and labor and procyclicality in observed productivity. In this model, a financial shock generates a persistent and hump-shaped response, whereas a productivity shock does not. Further, the redistribution of wealth significantly amplifies the persistence and hump shape of these responses following a financial shock. This model suggests that redistribution may thus be a key driving force behind the transmission of financial crises.


2017 ◽  
Vol 9 (3) ◽  
pp. 199-228 ◽  
Author(s):  
Justin Gallagher ◽  
Daniel Hartley

Little is known about how affected residents are able to cope with the financial shock of a natural disaster. This paper investigates the impact of flooding on household finance. Spikes in credit card borrowing and overall delinquency rates for the most flooded residents are modest in size and short-lived. Greater flooding results in larger reductions in total debt. Lower debt levels are driven by homeowners using flood insurance to repay their mortgages rather than to rebuild. Mortgage reductions are larger in areas where reconstruction costs exceeded pre-Katrina home values and where mortgages were likely to be originated by nonlocal lenders. (JEL D14, G21, G22, Q54)


2019 ◽  
Vol 1 (1) ◽  
Author(s):  
Christos Staikouras

This paper provides a framework to reveal happiness frontier based on British Household Panel Survey. Thereafter we focus on what is the impact of financial shock on reaching the frontier. By doing so we also explore the nexus between personality traits, such as extraversion, neuroticism, and openness, and the financial shock. We further reveal the underlying causality threads.


Author(s):  
Assaf Razin

The global financial crisis generated the deepest and longest recession since the Great Depression of the 1930s. The defining event of the 2008 global financial crisis was a “hemorrhagic stroke”: a paralytic implosion of the loanable funds markets. Depression forces such as they exist in the US, Europe, or Japan, do not appear to hold in the case of Israel. Its resilience to the external financial shock during the global crisis is rooted in (a) the absence of credit boom in the wake of the crisis, and (b) the relatively small commercial banks' exposure in terms of toxic assets that for the European countries played a major role. Reacting to the global trade-diminishing shocks, policy makers’ concern was three-fold: First, banks exposures to toxic assets such as mortgage based securities and foreigners’ debt obligations. Partly because Israel skipped the credit bubble, and bank regulations were relatively tight, Israel showed a sound resilience to the global financial shock. Second, Israel export markets softened and demand conditions deteriorated. Third, Israel domestic currency got strengthened. Bank of Israel addressed the last two issues by a massive foreign exchange market intervention to weaken the value of the domestic currency, and stimulate exports. The need to prolong the stimulus policies dissipated relatively fast.


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