Federal Reserve

FEDS Paper: Trademarks in Banking

Ryuichiro Izumi, Antonis Kotidis, and Paul E. SotoOne in five banks in the United States share a similar name. This can increase the likelihood of confusion among customers in the event of an idiosyncratic shock to a similarly named bank. We find that banks that share their name with a failed bank experience a half percent drop in transaction deposits relative to banks with similar characteristics but different name.

FEDS Paper: Demand Uncertainty, Selection, and Trade

Erick Sager and Olga A. TimoshenkoThis paper examines the role of uncertainty on elasticities of trade flows with respect to variable trade costs in a canonical model of trade with monopolistic competition and heterogeneous firms. We identify two channels through which uncertainty impacts trade: through export participation thresholds (the selection effect) and the distribution of shocks governing export selection (the dispersion effect).

FEDS Paper: Information Friction in OTC Interdealer Markets

Benjamin Gardner and Yesol HuhIn over-the-counter (OTC) securities markets, interdealer markets are an important venue through which dealers can offload positions and share risk amongst themselves. Contrary to the popular conception that search frictions matter the most in OTC markets, we find that in the interdealer market for U.S. corporate bonds, information frictions are most relevant.

FEDS Paper: Factor Selection and Structural Breaks

Siddhartha Chib and Simon C. SmithWe develop a new approach to select risk factors in an asset pricing model that allows the set to change at multiple unknown break dates. Using the six factors displayed in Table 1 since 1963, we document a marked shift towards parsimonious models in the last two decades. Prior to 2005, five or six factors are selected, but just two are selected thereafter.

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