Studies from Federal Reserve Board in the Area of Investment Described (Bank Risk-taking and the Real Economy: Evidence From the Housing Boom and Its Aftermath): Investment

2026 JAN 14 (NewsRx) -- By a News Reporter-Staff News Editor at Economics Daily Report -- A new study on Investment is now available. According to news reporting out of Washington, District of Columbia, by NewsRx editors, research stated, “During the U.S. housing credit boom, publicly traded banks increased mortgage lending activity and relaxed standards much more than privately held banks.”

Financial support for this research came from Division of Research at Harvard Business School.

Our news journalists obtained a quote from the research from Federal Reserve Board, “The increase in risk had real effects for a variety of county-level aggregates including employment and consumption. Cross-sectional evidence and a quasi-experiment indicate that the increase in risk stemmed from the institutional ownership and the equity compensation of publicly traded banks, in turn leading banks to place greater weight on short-term equity performance.”

According to the news editors, the research concluded: “These results are consistent with the view that a focus on short-term earnings and stock prices amplifies boom-bust credit cycles, in turn leading to real cycles for the aggregate economy.”

This research has been peer-reviewed.

For more information on this research see: Bank Risk-taking and the Real Economy: Evidence From the Housing Boom and Its Aftermath. The Review of Financial Studies, 2025. The Review of Financial Studies can be contacted at: Oxford Univ Press Inc, Journals Dept, 2001 Evans Rd, Cary, NC 27513, USA.

Our news journalists report that additional information may be obtained by contacting Antonio Falato, Federal Reserve Board, Washington, DC 20551, United States. Additional authors for this research include Giovanni Favara and David Scharfstein.

The direct object identifier (DOI) for that additional information is: https://doi.org/10.1093/rfs/hhaf091. This DOI is a link to an online electronic document that is either free or for purchase, and can be your direct source for a journal article and its citation.

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