Michael Brei

Bank Failures and the Source of Strength Doctrine

This paper examines the determinants of bank failures in the US banking system during the recent financial crisis. The analysis employs a dataset on the financial statements of FDIC-insured commercial banks and their bank holding companies, along with information on bank failures, mergers, and acquisitions. The econometric evidence suggests that failed banks have been characterized by significantly higher loan growth rates, well ahead of the financial crisis, coupled with higher exposures to the mortgage market segment and to funding in the form of brokered deposits. We also find evidence that commercial banks have been less likely to fail, when they belonged to well-capitalized and profitable bank holding companies with lower exposures to short-term funding. Our results provide empirical support for the recent modifications in bank regulation and supervision which introduce countercyclical components for capital buffers and a more comprehensive supervision of consolidated banking groups.

The Impact of Current Account Reversals on Relative Prices: The Brazilian Experience

The present paper is related to the literature on capital account reversals in which a country faces unexpected and collective withdrawals of foreign investments. The associated reduction in the supply of capital leads in succession to a slowdown in economic activity and, most often, to a reversal of the current account deficit and to adjustments in domestic prices. Here, we focus on the impact of current account reversals on domestic prices.