Research Working Papers

Competition and Bank Fragility

By W. Blake Marsh and Rajdeep Sengupta RESEARCH WORKING PAPERThe buildup in commercial real estate loan concentration and the consequent fragility in small U.S. banks can be traced to an increase in large bank competition following interstate deregulation.

Sectoral Loan Concentration and Bank Performance (2001-2014)

By Rajdeep Sengupta and Kristen Regehr RESEARCH WORKING PAPERSectoral loan concentration can influence the size-profitability relationship for banks and the likelihood of bank survival. Switching specializations increases the hazard of failure but decreases the odds of being acquired.

Do Bank Bailouts Reduce or Increase Systemic Risk? The Effects of TARP on Financial System Stability

By Raluca A. Roman, Allen N. Berger and John Sedunov RESEARCH WORKING PAPERThe TARP bailout significantly reduced contributions to systemic risk, particularly for large banks, safe banks, and banks located in strong local economies. These reductions occurred primarily through a capital cushion channel.

Raising Capital When the Going Gets Tough: U.S. Bank Equity Issuance from 2001 to 2014

By Rajdeep Sengupta, Lamont Black and Ioannis Floros RESEARCH WORKING PAPERBank equity issuance to private investors peaked during the crisis even as investor requirements grew more stringent.

Chargebacks: Another Payment Card Acceptance Cost for Merchants

By Fumiko Hayashi and Zach Markiewicz RESEARCH WORKING PAPERAbout 50 percent of total chargebacks are due to fraud. Both the total and fraud chargeback rates are significantly higher for card-not-present transactions than for card-present transactions. Those rates also vary by merchant category.

Driver of Choice? The Cost of Financial Products for Unbanked Consumers

By Fumiko Hayashi, Josh Hanson and Jesse Leigh Maniff RESEARCH WORKING PAPERPrepaid cards are significantly less costly than checking accounts for unbanked consumers who make overdrafts or need short-term loans, but prepaid cards are more costly for the other unbanked consumers.

Did Saving Wall Street Really Save Main Street? The Real Effects of TARP on Local Economic Conditions

By Raluca A. Roman and Allen N. Berger RESEARCH WORKING PAPERTARP significantly increased net job creation and net business hiring and decreased business and personal bankruptcies. These results suggest saving Wall Street through TARP may have helped save Main Street, contributing to the TARP cost-benefit debate.

Did Bank Borrowers Benefit from the TARP Program? The Effects of TARP on Loan Contract Terms

By Allen N. Berger, Tanakorn Makaew, and Raluca A. Roman
RESEARCH WORKING PAPERTARP led to more favorable credit terms to customers borrowing from the recipient banks in all five contract terms studied: loan amounts, spreads, maturities, collateral, and covenants. Benefits extended primarily to safer borrowers, and borrowers with and without a relationship.

Shareholder Activism in Banking

By Raluca A. Roman
Research Working Paper Shareholder activism may generally be a destabilizing force in banking, increasing bank risk while creating market value for shareholders. This may come at the expense of bank creditors, as per a creditor-shareholder conflict. However, activism effects may be muted during crises. 

Internationalization and Bank Risk

By Allen N. Berger, Sadok El Ghoul, Omrane Guedhami, and Raluca A. Roman
Research Working Paper Internationalization of U.S. banks is associated with higher risk, suggesting foreign market factors that make U.S. operations risky outweigh diversification benefits. Effect is stronger during crises and may be explained by agency problems related to poor corporate governance.

Faster Payments in the United States: How Can Private Sector Systems Achieve Public Policy Goals?

By Fumiko Hayashi
RESEARCH WORKING PAPERTo help private-sector faster payments systems achieve public policy goals of ubiquity, safety, and efficiency, the Federal Reserve could influence governance of the private-sector systems through its leadership role.

Research Articles

Managing Fraud in Remote Payments

By Zach Markiewicz and Richard J. Sullivan PAYMENTS SYSTEM RESEARCH BRIEFINGFollowing the rollout of new chip cards and ongoing growth in e-commerce, merchants and policymakers are seeking ways to blunt a likely surge in remote payment fraud.

Competition and Coordination: The Card Network Balancing Act

By Jesse Leigh Maniff PAYMENTS SYSTEM RESEARCH BRIEFINGAs payment card networks seek to balance the benefits of collaboration against allegations of anti-competitive behavior, efforts to improve payments security may be hindered by the threat of legal action.

Banks Re-enter the P2P Payments Fray: With Mobile, Will this Time Be Different?

By Terri Bradford PAYMENTS SYSTEM RESEARCH BRIEFINGAfter coming up short against nonbanks in two previous rounds of the fray over P2P payments, banks appear to be poised to go toe-to-toe this time around.

Enforcement Actions and Bank Loan Contracting

By Raluca A. Roman ECONOMIC REVIEWRaluca A. Roman finds that bank loans initiated after an enforcement action have lower interest rates than loans initiated before an enforcement action.

Access to Electronic Payments Systems by Unbanked Consumers

By Fumiko Hayashi ECONOMIC REVIEWFumiko Hayashi identifies electronic payment products that can mitigate unbanked consumers’ problems with the banking system.

Has the Relationship between Bank Size and Profitability Changed?

By Rajdeep Sengupta and Kristen Regehr ECONOMIC REVIEWKristen Regehr and Rajdeep Sengupta explore whether the relationship between bank size and profitability changed after the 2007–09 financial crisis.

Data Breach Notification Laws

By Jesse Leigh Maniff
ECONOMIC REVIEWRichard J. Sullivan and Jesse Leigh Maniff study individual provisions within states' data breach notification laws to evaluate their effects on identity theft.

Competition in Local Agricultural Lending Markets: The Effect of the Farm Credit System

By Charles Morris, James Wilkinson and Eric Hogue ECONOMIC REVIEWCharles S. Morris, James Wilkinson, and Eric Hogue assess the effects of Farm Credit Association lending on measures of competition in agricultural banking markets.

The Puzzle of Payments Security: Fitting the Pieces Together to Protect the Retail Payments System

PAYMENTS SYSTEM RESEARCH BRIEFINGThis Briefing article offers highlights from the Federal Reserve Bank of Kansas City's fifth international payments conference, "The Puzzle of Retail Payments Security: Fitting the Pieces Together to Protect the Retail Payments System," hosted June 25-26, 2015.

Bank Consolidation and Merger Activity Following the Crisis

Economic Review Michal Kowalik, Troy Davig, Charles S. Morris, and Kristen Regehr analyze the financial characteristics of acquired community banks from 2011 to 2014.

Payments Conferences

Conference explores consumer payment innovation and the role of public policy in an age of increasing connectedness. Access materials from past conferences: 20152012 | 2009 | 2007 | 2005.

Public Authority Involvement in Payment Card Markets: Various Countries (08/2017)

A summary of regulatory developments in interchange fees and surcharges in various countries is provided.

Credit and Debit Card Interchange Fees in Various Countries (08/2017)

Levels of interchange fees for credit and debit cards are compared among countries in Europe, Oceania and North America.

Credit and Debit Card Interchange Fees in the U.S. (08/2017)

Charts show trends of U.S. credit and debit card interchange fees for several merchant categories.

Banking Research Papers

Working papers and journal articles highlight our banking research.

Payments System Research Briefings

Our briefings cover payments methods, developments in payments networks, and various participants' roles in the payments system.

Payments System Research Working Papers

Our paper topics include types of payments methods, developments in payments networks, and various participants' roles in the payments system.

A Guide to the ATM and Debit Card Industry: 2006 Update

This book is a 2006 update that documents industry trends and patterns and discusses their implications.

A Guide to the ATM and Debit Card Industry

This book provides an overview of the history and developement of the ATM and debit card industry, details the mechanics of ATM and debit transactions, reviews trends in ATM and debit transaction volume and pricing, and discusses industry and public policy issues.

Nonbanks in the Payments System

This book examines nonbank participation of payments activities and the roles nonbanks play in specific transaction types.