News and Commentary
Liberty Street Economics has a new blog post on subprime borrowing and the 2000s housing boom. The authors find house price growth was negatively correlated with growth in lending to subprime borrowers.
The Brookings Institution’s Aaron Klein has a new comment letter to the Fed on the nature of bank ratings. He argues greater transparency of the CAMELS ratings would create a more even playing field across the scale of financial institutions while providing market participants useful information.
New Research
A new paper by the Levy Economics Institute analyzes financial globalization in the lead up to World War Two and a more recent period starting with the 1970’s. It concludes a laissez-faire approach to globalization could make it more difficult for the state to function as a financial guarantor.
A new NBER working paper examines trust in financial institutions, analyzing the effects of randomly assigning cash transfer beneficiaries to a training session on financial institutions. They find significant gains in trust and higher savings than the control group, though no greater financial literacy or use of bank accounts for transactions.
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