Profits and balance sheet developments at U.S. commercial banks in 2002

Despite the lackluster performance of the U.S. economy, the profitability of the U.S. commercial banking industry was again high in 2002, and the return on bank assets reached its highest level in more than three decades. Profitability was spurred in considerable part by declines in market interest rates to extraordinarily low levels. Short-term interest rates were low throughout 2002 as a result of the Federal Reserve's aggressive easing the year before in response to economic weakness, and longer-term rates fell to multidecade lows by year-end. Nevertheless, the yield curve steepened on average, benefiting net interest margins. The decline in longer-term interest rates also boosted realized gains on securities. The low interest rates strengthened the ability of households and businesses to service their debt, which also supported bank profitability. Finally, a change in accounting rules that largely eliminated the requirement to amortize goodwill caused a one-time drop in expenses. Despite the largest decline in commercial and industrial loans since the 1990-91 recession, the expansion of bank balance sheets quickened last year, driven primarily by real estate lending and substantial acquisitions of securities. Equity capital rose slightly faster than assets, and regulatory capital ratios also improved a bit, benefiting from an increased share of assets with low regulatory risk weights.Banks and banking ; Bank profits ; Bank assets

Regime-switching in expectations over the business cycle

In this paper the authors argue that a plausible reason why output and other major U.S. macroeconomic time series seem to follow a Markov switching process might be strictly related to expectations. The authors show that a time series of expectations of future output from the Survey of Professional Forecasters is the only one among the many they analyze that has switching properties compatible with those of output. Starting from this empirical evidence the authors present a business cycle model with shocks to expectations (sunspots) that produces time series with the same properties as the U.S. data.Business cycles ; Forecasting ; Time-series analysis

Profits and balance sheet developments at U.S. commercial banks in 2003

Amid a strengthening economic expansion, U.S. commercial banks remained highly profitable in 2003. Return on assets reached a record level for the second year in a row, and return on equity was near the top of its recent range. Banks' profits were bolstered by decreased loan-loss provisions as a rising economy and considerable debt refinancing at very low interest rates led to lower delinquency rates on business and household loans. Fees associated with record mortgage refinancing activity and robust corporate bond issuance boosted non-interest income. Increases in non-interest expense were generally modest, although compensation-related costs rose more briskly. Lower long-term interest rates in the first part of the year allowed banks to realize gains on the sale of some of their securities, but they also contributed to a further shrinking of net interest margins. Banks' balance sheets expanded briskly, as the strong housing market and heavy refinancing activity boosted residential mortgages and mortgage-backed securities. Business loans ran off for a third year, albeit at a slower pace than in 2002 and 2003. Banks' regulatory capital positions strengthened further, as the growth of assets with low regulatory risk weights outpaced that of assets with higher risk weights.Banks and banking ; Bank profits ; Bank assets

The recent behaviour of financial market volatility

A striking feature of financial market behaviour in recent years has been the low level of price volatility over a wide range of financial assets and markets. The issue has attracted the attention of central bankers and financial regulators due to the potential implications for financial stability. This paper makes an effort to shed light on this phenomenon, drawing on literature surveys, reviews of previous analyses by non-academic commentators and institutions, and some new empirical evidence. The paper consists of seven sections. Section 2 documents the current low level of volatility, putting it into a historical perspective. Section 3 briefly reviews the theoretical determinants of volatility, with the aim of helping the reader through the subsequent sections of this Report, which are devoted to the explanations of the phenomenon under study. These explanations have been grouped into four categories: real factors; financial factors; shocks; and monetary policy. Thus, Section 4 looks into the relation between volatility and real factors, from both a macro- and a microeconomic perspective. Section 5 considers how the recent developments in financial innovation and improvements in risk management techniques might have contributed to the decline in volatility. Section 6 considers the relation between real and financial shocks and volatility. Finally, Section 7 explores whether more systematic and transparent monetary policies might have led to lower asset price volatility.financial volatility, risk taking, international financial markets

Persistence of Business Cycles in Multisector RBC Models.

In this paper we explore whether the changing composition of output in response to technology shocks can play a significant role in the propagation of shocks over time. For this purpose we study two multisector RBC models, with two and a three sectors. We find that, whereas the two sectors model requires a high intertemporal elasticity of substitution fo consumption to match the dynamic properties of the US data, the three sector model has a strong propagation mechanism under conventional parameterizations, as long as the factor intensities in the three sectors are different enough.MACROECONOMICS ; BUSINESS CYCLES ; ECONOMIC GROWTH

Síndrome metabólica em adolescentes obesos: comparação entre três diferentes critérios diagnósticos

Objective: To investigate the difference in the proportion of adolescents with metabolic syndrome diagnosed based on three different criteria, as well as the use of insulin resistance instead of fasting glucose.Methods: Cross-sectional study with 121 obese adolescents, between 10 and 14 years old, from public schools of the city of Porto Alegre, Brazil, in 2011. Anthropometric, blood pressure, and biochemical variables were assessed. Metabolic syndrome was defined using three different diagnostic criteria: the International Diabetes Federation (IDF), Cook and de Ferranti. All of them include five components: waist circumference, blood pressure, high-density lipoprotein (HDL) cholesterol, triglycerides and fasting glucose, and there should be at least three abnormal results for the diagnosis of the syndrome. the Homeostasis Model Assessment - Insuline Resistance (HOMA-IR) was used for the characterization of insulin resistance. the analysis of agreement among the criteria was performed using Kappa statistics.Results: Metabolic syndrome Was diagnosed in 39.7, 51.2, and 74.4% of adolescents, according to the IDF, Cook and de Ferranti criteria, respectively. There was agreement for the three diagnostic criteria in 60.3% of the sample. Waist circumference was the most prevalent component (81.0, 81.0, and 96.7%), whereas high fasting glucose was the least prevalent (7.4, 1.7, and 1.7%). the use of HOMA-IR significantly increased the proportion of positive diagnoses for the syndrome.Conclusion: the results showed significant differences between the three diagnostic criteria. While there is no consensus on the diagnostic criteria for metabolic syndrome, differences in the prevalence of the disease in pediatric population will be frequent.Conselho Nacional de Desenvolvimento Científico e Tecnológico (CNPq)Fundo de Incentivo a Pesquisa e Eventos (FIPE), Hospital de Clinicas de Porto Alegre (HCPA)Research and Events Incentive Fund - FIPE of Hospital de Clinicas de Porto Alegre - HCPAUniversidade Federal de São Paulo UNIFESP, São Paulo, BrazilUniv Fed Rio Grande do Sul, Escola Educ Fis ESEF, Porto Alegre, RS, BrazilUniv Fed Rio Grande do Sul, ESEF, Porto Alegre, RS, BrazilUniv London, Inst Child Hlth, London WC1N 1EH, EnglandUniv Fed Rio Grande do Sul, Fac Med, Dept Pediat, Porto Alegre, RS, BrazilHCPA, Serv Pediat, Porto Alegre, RS, BrazilUniv Fed Santa Maria, Santa Maria, RS, BrazilUniversidade Federal de São Paulo UNIFESP, São Paulo, BrazilCNPq: 159754/2010-0Web of Scienc