Atlanta Fed Working Papers
The Research Department of the Federal Reserve Bank of Atlanta publishes a working paper series to convey the research of staff economists and visiting scholars and stimulate professional discussion and exploration of economic and financial subjects.
Diamond-Dybvig and Beyond: On the Instability of Banking
Chao Gu, Cyril Monnet, Ed Nosal, and Randall Wright
Working Paper 2023-2
Are financial intermediaries inherently unstable? The authors address this question using a number of different, but related, models. They consistently find that financial intermediaries are more prone to instability than other types of nonfinancial organizations.
Sovereign Risk and Bank Lending: Theory and Evidence from a Natural Disaster
Yusuf Soner Bașkaya, Bryan Hardy, Șebnem Kalemli-Özcan, and Vivian Yue
Working Paper 2023-1
Examining the relationship between sovereign risk and bank lending, the authors find that for banks with higher exposure to government securities, a higher sovereign default risk implies lower net worth and tightening financial constraint, which lead to lower credit provision.