FEDS Paper: Monetary Policy and Bank Funding Costs: Patterns and Predictability in the Transmission of the Policy Rate to U.S. Banks' Funding Costs

09/19/2025 Federal Reserve Central banks

Daniel A. Dias; Sophia C. ScottThis paper shows that U.S. commercial banks' funding betas rise predictably with the length, magnitude, and direction of each monetary policy cycle: longer cycles and those with larger changes in the policy rate yield stronger pass-through in both tightening and loosening cycles, with modest asymmetry favoring slightly greater transmission during loosening cycles. Nondeposit liabilities consistently adjust more than deposits.

FEDS Paper: Does Financial Stress Affect Commodity Futures Traders' Positions?

09/19/2025 Federal Reserve Central banks

Shengwu Du, Travis D. Nesmith, Yang HeppeFinancial stress can impact trading behavior in the U.S. commodity futures markets. To clarify the impact, we study absolute changes and relative exposure dynamics in traders' positions during two recent crises: the 2008 Global Financial Crisis (GFC) and the COVID-19 pandemic. The nature of these two crises are very distinct, and we find that traders behaved quite differently.

FEDS Paper: Do Banks Price Flood Risk in Mortgage Origination: Evidence from a Natural Experiment in New Orleans

09/19/2025 Federal Reserve Central banks

David M. Arseneau and Gazi I. KaraThis paper uses a large-scale redrawing of flood zone maps for the City of New Orleans in 2016 to identify how banks respond to changes in perceived flood risk in residential mortgage origination. Using geo-coding, we separate loan-level data on mortgage originations into treatment versus control groups based on how individual properties were affected by the map changes.

FEDS Paper: Financial Structure and Mergers

09/19/2025 Federal Reserve Central banks

Charles Taragin, Benjamin Wallace, Eddie WatkinsWe study how corporate debt influences the competitive outcomes of horizontal and conglomerate mergers. In contrast to standard models where debt does not affect pricing, our framework shows that mergers can spread fixed debt obligations across a broader product portfolio, creating an "insurance effect" against adverse demand shocks. This effect interacts with the traditional recapture effect from reduced competition.

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