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Working Paper

Credit Market Information Feedback

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We examine how a combination of credit market and asset quality information can jointly be used in assessing bank franchise value. We find that expectations of future credit demand and future asset quality explain contemporaneous bank franchise value, indicative of the feedback in credit market information and its consequent impact on bank franchise value.
Topics
Financial markets
09.16.2015ISSN 2573-7953 WP 15-15DOI 10.26509/frbc-wp-201515
Keywords bank franchise value, asset quality, credit demand, information, expectations
JEL Classification Codes E52, G01, G28

Working Papers of the Federal Reserve Bank of Cleveland are preliminary materials circulated to stimulate discussion and critical comment on research in progress. They may not have been subject to the formal editorial review accorded official Federal Reserve Bank of Cleveland publications. The views expressed in this paper are those of the authors and do not represent the views of the Federal Reserve Bank of Cleveland or the Federal Reserve System.

Suggested Citation

Balasubramanyan, Lakshmi, Ben R. Craig, James B. Thomson, and Saeed Zaman. 2015. “Credit Market Information Feedback.” Federal Reserve Bank of Cleveland, Working Paper No. 15-15. https://doi.org/10.26509/frbc-wp-201515