#2008-033A "Are Credit Unions Too Small?"
by David C. Wheelock, and Paul Wilson
September 2008

Since 1985, the share of U.S. depository institution assets held by credit unions has nearly doubled, and the average (inflation-adjusted) size of credit unions has increased over 600 percent. We use a non-parametric local-linear estimator to estimate a cost relationship for credit unions and derive estimates of ray-scale and expansion-path scale economies. More...

#2008-024A "The Loan Structure and Housing Tenure Decisions in an Equilibrium Model of Mortgage Choice"
by Matthew Chambers, Carlos Garriga, and Don Schlagenhauf
June 2008

The past decade has brought substantial innovations in the structure of mortgage loans. The objective of this paper is to understand how loan structure (terms of repayment and amortization schedule) affects (i) the borrower’s selection of a mortgage contract and (ii) the aggregate economy. More...

FORTHCOMING: Review of Economic Dynamics

#2008-006A "The Dynamic Interaction of Order Flows and the CAD/USD Exchange Rate"
by Nikola Gradojevic, and Christopher J. Neely
February 2008

We explore the relationship between disaggregated order flow, the Canada/U.S. dollar (CAD/USD) market and U.S. macroeconomic announcements. Three types of CAD order flow and the CAD/USD are cointegrated. More...

#2007-044B "Lending to Uncreditworthy Borrowers"
by Rajdeep Sengupta
October 2007
Revised October 2008

How might a low cost of funds prompt lenders to include uncreditworthy borrowers in their loan portfolio? This paper presents a theoretical study into how lender competition can affect borrower quality, especially when the cost of funds is low. More...

#2007-017A "Affiliated Mutual Funds and Analyst Optimism"
by Simona Mola, and Massimo Guidolin
April 2007

Prior studies have shown that investment banking affiliations place pressure on analysts to produce optimistic recommendations on the investment bank’s stock-clients. More...

#2007-011A "Handicapping Currency Design: Counterfeit Deterrence and Visual Accessibility in the United States and Abroad"
by Marcela M. Williams, and Richard G. Anderson
March 2007
Revised June 2007

Despite the increasing use of electronic payments, currency retains an important role in the payment system of every country. In this article, the authors compare and contrast tradeoffs among currency design features, including those primarily intended to deter counterfeiting and ones to improve usability by the visually impaired. More...

PUBLISHED: Federal Reserve Bank of St. Louis Review, September/October 2007, 89(5), pp. 371-414

#2007-007A "Social Learning and Monetary Policy Rules"
by Jasmina Arifovic, James B. Bullard, and Olena Kostyshyna
March 2007

We analyze the effects of social learning in a widely-studied monetary policy context. More...

#2006-058C "Strategic Online-Banking Adoption"
by Roberto Fuentes, Rubén Hernández-Murillo, and Gerard Llobet
October 2006
Revised January 2008

In this paper we study the determinants of banks’ decision to adopt a transactional website for their customers. More...

#2006-043A "Foreign Entry and Bank Competition"
by Rajdeep Sengupta
July 2006

Foreign entry and bank competition are modeled as the interaction between asymmetrically informed principals: the entrant uses collateral as a screening device to contest the incumbent's informational advantage. Both better information ex ante and stronger legal protection ex post are shown to facilitate the entry of low-cost outside competitors into credit markets. More...

PUBLISHED: Journal of Financial Economics, May 2007, 84(2), pp. 502-28

#2006-042A "The Termination of Subprime Hybrid and Fixed Rate Mortgages"
by Anthony Pennington-Cross, and Giang Ho
July 2006

Adjustable rate and hybrid loans have been a large and important component of subprime lending in the mortgage market. While maintaining the familiar 30-year term the typical adjustable rate loan in subprime is designed as a hybrid of fixed and adjustable characteristics. More...