Researchers explore impact of bank stress on the real economy

Large banks should be subject to more stringent requirements, authors say

Regulation and compliance

The impact on the real economy of financial stress experienced by banks increases with the size of the bank, a team of researchers for the Federal Reserve find.

Amy Lorenc and Jeffery Zhang investigate the relationship between the financial stress experienced by different sized banks, measured by total assets; and real economic activity, measured by GDP growth. They define ‘stress’ as a bank failing or receiving assistance from the Federal Deposit Insurance Corporation.

Over the period of 1960

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