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The Banking Industry and COVID-19: Lifeline or Life Support?

Author

Listed:
  • Madeline Finnegan
  • Sarah Ngo Hamerling
  • Beverly Hirtle
  • Anna Kovner
  • Stephan Luck
  • Matthew Plosser

Abstract

By many measures the U.S. banking industry entered 2020 in good health. But the widespread outbreak of the COVID-19 virus and the associated economic disruptions have caused unemployment to skyrocket and many businesses to suspend or significantly reduce operations. In this post, we consider the implications of the pandemic for the stability of the banking sector, including the potential impact of dividend suspensions on bank capital ratios and the use of banks’ regulatory capital buffers.

Suggested Citation

  • Madeline Finnegan & Sarah Ngo Hamerling & Beverly Hirtle & Anna Kovner & Stephan Luck & Matthew Plosser, 2020. "The Banking Industry and COVID-19: Lifeline or Life Support?," Liberty Street Economics 20201005, Federal Reserve Bank of New York.
  • Handle: RePEc:fip:fednls:88834
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    More about this item

    Keywords

    COVID-19; crisis; recession; Great Recession; capital loss; banking industry;

    JEL classification:

    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • I15 - Health, Education, and Welfare - - Health - - - Health and Economic Development

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