Scale economies and technological change in Federal Reserve ACH payment processing

An analysis of the contribution of scale economies, technological change, and falling input prices to the absolute reduction in the real processing costs of an ACH transfer over the 1979-94 period.Clearinghouses (Banking)

Estimates of scale and cost efficiency for Federal Reserve currency operations

Meeting the currency demands of depository institutions, businesses, and consumers costs the Federal Reserve more than half a billion dollars each year, yet, very little research has been devoted to understanding what factors affect such costs. The authors estimate a cost function in order to obtain estimates of scale and cost efficiency for this service. They find that as in other paper-based technologies, such as checks, scale economies are achieved at a relatively low level of output, implying that currency services are not a natural monopoly. They also provide estimates of facility-specific marginal costs and returns to scale measures that could be used to improve resource allocations. Lastly, they find that the average processing facility operates at more 80 percent of the efficiency of the “best practice” facility, comparable to cost efficiency estimates that have been reported elsewhere for private-sector financial institutions.Federal Reserve banks - Costs ; Payment systems

Federal Home Loan Bank advances and commercial bank portfolio composition

This paper considers the role of Federal Home Loan Bank (FHLB) advances in stabilizing their commercial bank members' residential mortgage lending activities. Our theoretical model shows that using mortgage-related membership criteria or requiring mortgage-related collateral does not ensure that FHLB advances will be put to use for stabilizing members' financing of housing. Using panel vector autoregression (VAR) techniques, we estimate recent dynamic responses of U.S. bank portfolios to FHLB advance shocks, bank lending shocks, and macroeconomic shocks. Our empirical findings suggest that FHLB advances are just as likely to fund other types of bank credit as to fund single-family mortgages.

A reconsideration of the risk sensitivity of U.S. banking organization subordinated debt spreads: a sample selection approach

The authors estimate a sample selection model over three distinct regulatory "regimes" when the treatment of bank bondholders (in the event of bank failures) differed substantially. They then estimate their selection model to test the strength of bond market discipline over these three regulatory regimes, finding that bank bond spreads are positively associated with bank risk measures during all three regimes, even during the too-big-to-fail period.Bank assets ; Debt management ; Banks and banking - Ratio analysis ; Deposit insurance

Dawn or Doom: The Risks and Rewards of Emerging Technologies

Dawn or Doom is a free and open to the public conference at Purdue where we focus on benefits and risks surrounding some of the technologies that are both the most disruptive to current practices and being adopted the fastest. A collection of Purdue faculty experts and some outside speakers showcase their many perspectives related to this technology explosion, explore conditions that will foster innovation and investment into the next generation, and address the big-picture issues where both optimism and pessimism are warranted

A Rapid Assessment of Disaster Preparedness Needs and Resources during the COVID-19 Pandemic.

Background: This year has seen the emergence of two major crises, a significant increase in the frequency and severity of hurricanes and the COVID-19 pandemic. However, little is known as to how each of these two events have impacted the other. A rapid qualitative assessment was conducted to determine the impact of the pandemic on preparedness and response to natural disasters and the impact of past experiences with natural disasters in responding to the pandemic. Methods: Semi-structured interviews were conducted with 26 representatives of 24 different community-based programs in southern Louisiana. Data were analyzed using procedures embedded in the Rapid Assessment Procedure-Informed Community Ethnography methodology, using techniques of immersion and crystallization and focused thematic analysis. Results: The pandemic has impacted the form and function of disaster preparedness, making it harder to plan for evacuations in the event of a hurricane. Specific concerns included being able to see people in person, providing food and other resources to residents who shelter in place, finding volunteers to assist in food distribution and other forms of disaster response, competing for funds to support disaster-related activities, developing new support infrastructures, and focusing on equity in disaster preparedness. However, several strengths based on disaster preparedness experience and capabilities were identified, including providing a framework for how to respond and adapt to COVID and integration of COVID response with their normal disaster preparedness activities. Conclusions: Although prior experience has enabled community-based organizations to respond to the pandemic, the pandemic is also creating new challenges to preparing for and responding to natural disasters