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on Community banking and credit unions |
| By: | Jonathan Swarbrick (University of St Andrews) |
| Abstract: | This paper studies monetary policy in a New Keynesian economy with frictional bank lending, rationalising evidence that lending conditions can remain tight despite liquidity injections. The model features a policy trade-off in which increases in banking sector liquidity can incentivise more lending by lowering the overnight rate and the marginal cost of funds, but can also incentivise less lending by compressing bank margins as interest rates approach the policy floor, worsening adverse selection and credit rationing. As a result, quantitative easing can exert a contractionary effect when the economy is away from the effective lower bound, with outcomes depending on borrower risk and the size of the programme. However, both channels raise inflation expectations, and so liquidity policies are always expansionary at the lower bound. Optimal policy features a deflation bias under credit rationing, while commitment to future accommodation eases current credit conditions and implies gradualism in quantitative tightening. |
| Keywords: | Monetary policy; quantitative easing; small business lending; credit rationing; bank liquidity |
| JEL: | E5 E44 G21 |
| Date: | 2026–03–25 |
| URL: | https://d.repec.org/n?u=RePEc:san:econdp:2601 |
| By: | Ma, Yiming; Mendicino, Caterina; Supera, Dominik; Li, Jian |
| Abstract: | We analyze how bank lending to non-bank financial institutions (NBFIs) affects credit supply to the real economy. Using granular supervisory and loan-level data, we document rapid growth in bank lending to NBFIs relative to lending to non-financial firms. This growth is driven primarily by reverse repos to NBFIs that invest in securities, e.g., investment funds, rather than by loans to NBFIs that extend credit to firms, e.g., private credit funds. We show that the expansion in bank–NBFI lending reflects rising NBFI borrowing demand to fund government securities, which stems in part from the tapering of QE and the expansion of government bond supply in the Euro area, US, UK, and Japan. Importantly, loans to NBFIs disproportionately crowd out loans to non-financial firms rather than securities on bank balance sheets, which ultimately contracts credit supply to the real economy. A model rationalizes our empirical findings and quantifies the aggregate crowding-out effect. Taken together, our results imply that the rise of bank lending to NBFIs represents a narrowing of bank business models and a contraction in bank credit intermediation. JEL Classification: G21, G23, G24, G28, E44, E58 |
| Keywords: | bank regulation, banks, financial intermediation, non-bank financial institutions, securities funding |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:ecb:ecbwps:20263220 |
| By: | Julianne Baer |
| Abstract: | The interchange, or 'swipe, ' fees collected by U.S. banks grew to $66 billion in 2025 as debit and credit card purchase volumes and values increased. |
| Keywords: | interchange fees; swipe fees; banking analytics |
| Date: | 2026–04–09 |
| URL: | https://d.repec.org/n?u=RePEc:fip:l00001:103019 |
| By: | Lily Gordon; Lee Seltzer |
| Abstract: | Many modern banking organizations are highly complex. A “bank” is often a larger structure made up of distinct entities, each subject to different regulatory, supervisory, and reporting requirements. For researchers and policymakers, understanding how these institutions are structured and how they have evolved over time is essential. In this post, we illustrate what a modern financial holding company looks like in practice, document how banks’ organizational structures have changed over time, and explain why these details matter for conducting accurate analyses of the financial system. |
| Keywords: | bank regulation; bank supervision; financial institutions |
| JEL: | G20 G28 |
| Date: | 2026–03–31 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fednls:102978 |
| By: | Lacaza, Rutcher M.; Pesa, Nikka C.; Agner, Mary Grace R. |
| Abstract: | This paper examines how digital financial platform engagement influences financial inclusion in the Philippines and explores how financial institutions are deploying artificial intelligence (AI) in enhancing these platforms. It combines nationally representative data from the World Bank Global Findex (2021), institutional indicators from the International Monetary Fund (IMF) Financial Access Survey (2016–2024), and qualitative insights from financial institutions and policy experts. From the demand side, a Digital Financial Engagement Index was constructed based on individuals’ usage of mobile payments, online banking, and digital financial services. Results reveal that digital financial engagement is a strong and consistent determinant of financial inclusion: individuals who actively use digital financial platforms are significantly more likely to own and use formal financial accounts. However, several barriers persist. The lack of money, high perceived costs, documentation issues, and low trust remain key constraints among Filipino adults, particularly among low-income groups. From the supply side, institutional data from the IMF Financial Access Survey (2016–2024) and insights from Key Informant Interviews (KIIs) reveal that financial infrastructure has expanded moderately. While AI adoption remains nascent and largely concentrated among large, digitally advanced financial institutions, AI technologies such as fraud detection, credit scoring, and chatbots are increasingly embedded in the digital platforms where consumers transact. In contrast, smaller cooperatives and savings and loan associations continue to face structural and resource-related barriers to adoption. The convergence of demand- and supply-side evidence highlights that digital financial engagement serves both as a driver and an indicator of financial inclusion, while AI adoption within these platforms has the potential to further enhance access, security, and user experience. Overall, this study provides new empirical evidence that digital financial engagement significantly enhances financial inclusion in the Philippines. The study also documents how financial institutions are strategically deploying AI within these digital platforms, providing insights for responsible AI adoption that can support inclusive financial services. By strengthening digital infrastructure, promoting financial and digital literacy, and ensuring responsible AI adoption, the Philippines can transform digital financial platforms into a true catalyst for inclusive and sustainable growth. Comments to this paper are welcome within 60 days from the date of posting. Email publications@pids.gov.ph. |
| Keywords: | digital financial engagement, artificial intelligence, financial inclusion, digital platforms, Philippines |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:phd:dpaper:dp_2026-03 |