Perspective on Bank Capital Adequacy: Time-Series Analysis

The first part of this paper provides a historical perspective on bank risks. Five-year moving average measures of total risk, market risk, and nonmarket risk are computed for an index of New York banks from 1929-1975 and for an index of outside New York banks from 1950-1976.We use a carefully constructed series of bank balance sheet data to compute correlations among various components of New York banks' port-folios and observe trends over time. The time series relationship between book values and market values is investigated, and classical measures of capital adequacy are calculated using surrogates for market values rather than book values. Finally, data are presented on the movement of interest rates and the term structure over time. Serial correlations and cross-correlations are computed. The second part of the paper uses the technique proposed in Sharpe ("Bank Capital Adequacy, Deposit Insurance and Security Values," June 1978) to gain information about capital adequacy. He has shown that for a bank with deposit liabilities that do not extend beyond the review period a "value preserving spread" in asset risk is likely to increase the value of capital. Moreover, the less adequate the capital, the larger this effect should be. We outline the method used to develop an econometric model to test for this effect. The model is then applied to time series data from 1938 to 1975.

Quantifying the Tightness of Mortgage Credit and Assessing Policy Actions

This Article quantifies the dramatic tightening of mortgage credit that has occurred in the post-crisis period. It then describes the policy actions to loosen the credit box taken to date by both the government sponsored enterprises (GSEs) and their regulator, the Federal Housing Finance Agency (FHFA), as well as those taken by the Federal Housing Administration (FHA), concluding the FHA still has some important actions it has yet to undertake. Finally, the consequences of tight credit are discussed: namely, a lower home ownership rate, particularly among minorities, leaving many unable to access what has historically been the single most powerful vehicle to build wealth

Housing Affordability: Local and National Perspectives

This paper presents a new approach to measuring affordable homeownership. Future changes in the homeownership rate will depend on the ability of today’s renters to become homeowners. Our proposed housing affordability for renters index (HARI) focuses on how affordable homeownership is for current renters. We look at the share of renters who reported the same or more income than those who recently purchased a home using a mortgage, in effect measuring how many renters have enough income to purchase a house. For each metropolitan statistical area (MSA), we construct a local area index that compares renters and borrowers in the same MSA and a national index that compares renters nationwide with homeowners in a specific MSA. We rely on the Administrative Data Research Facility to construct these indices. This database, constructed by the Urban Institute, aggregates American Community Survey variables and Home Mortgage Disclosure Act variables to common geographies. The new indices reveal that slightly more than a quarter of current US renters have incomes higher than those who recently became homeowners using a mortgage. The indices also reveal how housing affordability differs over time and across race/ethnicity groups and locations. We demonstrate the value of our new indices by showing that they are predictive of homeownership rates: MSAs that are deemed more affordable by our index have higher homeownership rates

Is Limited English Proficiency a Barrier to Homeownership?

Nearly 5.3 million US heads of household have limited or no ability to speak English. The connections between race or ethnicity and homeownership have been documented, but there has been little work to explain the relationship between the ability to speak English and homeownership. As homeownership is a primary tool for wealth building and financial stability, it is useful to understand the challenges this population faces in accessing homeownership. This brief first defines and identifies the limited English proficient (LEP) population in the United States. Using descriptive analysis and regression models, we find that at the zip code level, higher rates of limited English proficiency are associated with lower homeownership rates. If we control for other factors that influence homeownership (e.g., income, age, and race or ethnicity), zip codes with the highest concentrations of LEP residents have homeownership rates 5 percentage points lower than zip codes with the median concentration of LEP residents. In other words, limited English proficiency is a barrier to homeownership

A Three-Decade Decline in the Homeownership Gender Gap: What Drove the Change, and Where Do We Go from Here?

Over the past 30 years, women have made tremendous gains in closing both the income and the education gaps between them and men, and growth in their homeownership rates has become an important manifestation of these trends. In 1990, there were 15.7 million female-headed homeowner households. By 2019, that number had reached 39.2 million. In contrast, the number of male-headed homeowner households decreased from 44.4 million to 43.1 million.In this report, we examine homeownership by the gender of the household head and how it has changed over the past three decades. Our analysis explores factors narrowing the homeownership gender gap, overall and by race and ethnicity. This narrowing can be attributed mostly to gains in household income, followed closely by the fact that more married women are head of household

A Renter or Homeowner Nation?

Between the 1940s and the 1960s, the U.S. homeownership rate increased by nearly 20 percentage points, from mid-40 to mid-60 percent. The self-amortizing 30-year, fixed-rate mortgage, introduced by the Federal Housing Administration/Veterans Administration (VA—now the U.S. Department of Veterans Affairs) transformed the United States from a nation of renters to a nation of homeowners (Acolin and Wachter, 2015; Fetter, 2013)

Drinking Behaviors Versus Perceived Norms of Kentucky College Students

Accidents and unintentional injury are the number one cause of death in college-aged adults. More than 1,500 college-aged students die from alcohol-related unintentional injuries per year, including motor-vehicle crashes. Other alcohol-related problems for college students include physical assault, sexual assault, and poor academic performance. In the state of Kentucky 17% of adults report binge drinking habits, and 1 in 4 deaths are due to vehicular accidents involving alcohol consumption. This is in line with the stats for the rest of the country. The purpose of the study is to assess the drinking habits versus perceived drinking norms of students attending a regional Kentucky university. Data will be gathered using a self-reported survey known as the Drinking Behaviors vs. Perceived Norms of Kentucky College Students Survey, consisting of 8 questions asking about their drinking habits versus what they perceive the drinking habits of their peers to be, and 6 demographic questions. The data will be analyzed using frequencies, percentages, and means for demographic results and chi-square analysis comparing self-reported drinking habits and perceived drinking norms. Results will be forthcoming. Keywords: alcohol, norms, drinking behaviors, college student