How the mind works

Enclosed is a copy of the Board of Governors’ Semiannual Agenda of Regulations for the period August 1, 1980 through February 1, 1981. The Semiannual Agenda provides you with information on those regulatory matters that the Board now has under consideration or anticipates considering over the next six months, and is divided into three parts: (1) regulatory matters that the Board had considered during the previous six months on which final action has been taken; (2) regulatory matters that have been proposed for public comment and that require further Board consideration; and (3) regulatory matters that the Board may consider over the next six months.

Federal Reserve Bank of New Yorkの制定せる財務諸表様式について

(1975). The Limits of Organization. Journal of Economic Issues: Vol. 9, No. 3, pp. 543-544.

The Limits of Organization

This paper empirically examines how capital affects a bank’s performance (survival and market share), and how this effect varies across banking crises, market crises, and normal times that occurred in the U.S. over the past quarter century. We have two main results. First, capital helps small banks to increase their probability of survival and market share at all times (during banking crises, market crises, and normal times). Second, capital enhances the performance of medium and large banks primarily during banking crises. Additional tests explore channels through which capital generates the documented effects. Numerous robustness checks and additional tests are performed.

How Does Capital Affect Bank Performance During Financial Crises

The article reviews the book “Information Rules: A Strategic Guide to the Network Economy,” by Carl Shapiro and Hal R. Varian.

Information Rules: A Strategic Guide to the Network Economy

How does market information affect credit ratings? How do credit ratings affect market information? We analyze a model in which a credit rating agency's (CRA's) rating is followed by a market for credit risk that provides a public signal - the price. A more accurate rating decreases market informativeness, as it diminishes mispricing and, hence, incentives for investor information acquisition. On the other hand, more-informative trading increases CRA accuracy incentives by making rating inflation more transparent. If the first effect is strong, policies that increase reputational sanctions on CRAs decrease rating inflation, but also decrease the total amount of information.

https://papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID2948890_code1025731.pdf?abstractid=2948890&mirid=1

Credit Ratings and Market Information

Credit ratings and structured finance

This article offers an explanation of why firms' downsizing patterns may vary substantially in magnitude and timing, taking the form of one-time massive cuts, waves of layoffs, or zero layoff policies. The key element of this theory is that workers' expectations about their job security affect their on-the-job performance. In a situation where firms face adverse shocks, the productivity effect of job insecurity forces firms to balance laying off redundant workers and maintaining survivors' commitment. The cost of ensuring commitment differs between firms with different characteristics and determines whether workers are laid off all at once or in stages. However, if firms have private information about their future profits, they may not lay off any workers in order to signal a bright future, boosting worker's confidence. (JEL: J21, J23, D21, D82)

/pdf/downsizing-and-job-insecurity-2fd1zom42g.pdf

Downsizing and job insecurity

A regulator resolving a bank faces two audiences: depositors, who may run if they believe the regulator will not provide capital, and banks, which may take excess risk if they believe the regulator will provide capital. When the regulator's cost of injecting capital is private information, it manages expectations by using costly signals: (i) A regulator with a low cost of injecting capital may forbear on bad banks to signal toughness and reduce risk taking, and (ii) A regulator with a high cost of injecting capital may bail out bad banks to increase confidence and prevent runs. Regulators perform more informative stress tests when the market is pessimistic.

https://papers.ssrn.com/sol3/Delivery.cfm/DP9612.pdf?abstractid=2319937&mirid=1&type=2

Information Management in Banking Crises

Affordable higher education is, and has been, a key element of social policy in the United States with broad bipartisan support. Financial aid has substantially increased the number of people who complete university - generally thought to be a good thing. We show, however, that making education more affordable can increase income inequality. The mechanism that drives our results is a combination of credit constraints and the 'signaling' role of education first explored by Spence (1973). When borrowing for education is difficult, lack of a college education could mean that one is either of low ability or of high ability but with low financial resources. When government programs make borrowing easier or tuition more affordable, high-ability persons become educated and leave the uneducated pool, driving down the wage for unskilled workers and raising the skill premium.

/pdf/educational-opportunity-and-income-inequality-30nokyvdzs.pdf

Joel Shapiro

Papers

Credit Ratings and Market Information

Credit ratings and structured finance

Downsizing and job insecurity

Information Management in Banking Crises

Educational Opportunity and Income Inequality