G2 - Financial Institutions and Services

• Anatomy of a Twin Crisis

  Staff Working Paper 2003-41 Raphael Solomon

  The author presents a model of a twin crisis, in which foreign and domestic residents play a banking game. Both "honest" and run equilibria of the post-deposit subgame exist; some run equilibria lead to a currency crisis, as agents convert domestic currency to foreign currency.

  Content Type(s): Staff research, Staff working papers Topic(s): Exchange rates, Financial institutions JEL Code(s): E, E5, E58, F, F3, F30, G, G2, G21

• Excess Collateral in the LVTS: How Much is Too Much?

  Staff Working Paper 2003-36 Kim McPhail, Anastasia Vakos

  The authors build a theoretical model that generates demand for collateral by Large Value Transfer System (LVTS) participants under the assumption that they minimize the cost of holding and managing collateral for LVTS purposes. The model predicts that the optimal amount of collateral held by each LVTS participant depends on the opportunity cost of collateral, the transactions costs of acquiring assets used as collateral and transferring them in and out of the LVTS, and the distribution of an LVTS participant's payment flows in the LVTS.

  Content Type(s): Staff research, Staff working papers Topic(s): Financial institutions, Payment clearing and settlement systems JEL Code(s): E, E4, E44, G, G2, G21

• Essays on Financial Stability

  Technical Report No. 95 John Chant, Alexandra Lai, Mark Illing, Fred Daniel

  The four essays published here provide a useful overview for anyone interested in understanding the issues and policy environment surrounding financial system stability.

  Content Type(s): Staff research, Technical reports Topic(s): Financial institutions, Financial markets JEL Code(s): G, G2, G28

• The Syndicated Loan Market: Developments in the North American Context

  Staff Working Paper 2003-15 Jim Armstrong

  The author describes the rapid development of the syndicated corporate loan market in the 1990s. He explores the historical forces that led to the development of the contemporary U.S. syndicated loan market, which is effectively a hybrid of the investment banking and commercial banking worlds.

  Content Type(s): Staff research, Staff working papers Topic(s): Financial institutions, Financial markets JEL Code(s): G, G1, G10, G2, G21

• Managing Operational Risk in Payment, Clearing, and Settlement Systems

  Staff Working Paper 2003-2 Kim McPhail

  Awareness of operational risk has increased greatly in recent years, both at individual financial institutions and for payment, clearing, and settlement systems (PCSS). PCSS consist of networks of interconnected elements (i.e., central operators, participants, and settlement agents); operational problems at any one of the key elements have the potential to disrupt the system as a whole and negatively affect financial stability.

  Content Type(s): Staff research, Staff working papers Topic(s): Financial institutions, Payment clearing and settlement systems JEL Code(s): E, E4, E44, G, G2, G21

• Banking Crises and Contagion: Empirical Evidence

  Staff Working Paper 2003-1 Eric Santor

  Recent events, such as the East Asian, Mexican, Scandinavian, and Argentinian crises, have sparked considerable interest in exploring how shocks experienced by one country can spread vis-à-vis real and nominal links to other countries' banking systems. Given the large costs associated with banking-system failures, both economists and policy-makers are interested in predicting the onset of banking crises and assessing the likelihood of contagion during crisis events.

  Content Type(s): Staff research, Staff working papers Topic(s): International topics JEL Code(s): F, F3, F30, G, G2, G20