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Risk facing U.S. commercial banks

Author

Listed:
  • Prywes, Menahem

Abstract

The study examines the financial state of the U.S. commercial banks and of the main private borrowing sectors: corporate non-financial business and households. The study finds that the condition of the banks'loan portfolios exposes them to high losses. This risk together with the forthcoming increase of the required ratio of capital to assets suggests that banks will respond by slowing the growth of credit. One consequence would be weaker U.S. investment and consumption. Moreover, credit would probably be directed away from higher risk borrowers such as the highly indebted countries.

Suggested Citation

  • Prywes, Menahem, 1990. "Risk facing U.S. commercial banks," Policy Research Working Paper Series 534, The World Bank.
  • Handle: RePEc:wbk:wbrwps:534
    as

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    References listed on IDEAS

    as
    1. Jeffrey Sachs & Harry Huizinga, 1987. "U.S. Commercial Banks and the Developing-Country Debt Crisis," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 18(2), pages 555-606.
    2. repec:mes:challe:v:32:y:1989:i:2:p:44-49 is not listed on IDEAS
    3. John V. Duca & Mary M. McLaughlin, 1990. "Developments affecting the profitability of commercial banks," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), issue Jul, pages 477-499.
    4. Charles A. Luckett, 1988. "Personal bankruptcies," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), issue Sep, pages 591-603.
    5. Eli M. Remolona, 1990. "Understanding international differences in leverage trends," Monograph, Federal Reserve Bank of New York, number 1990uidil, September.
    6. Richard Cantor, 1989. "Interest rates, household cash flow, and consumer expenditures," Quarterly Review, Federal Reserve Bank of New York, issue Sum, pages 59-67.
    7. Ben S. Bernanke & John Y. Campbell, 1988. "Is There a Corporate Debt Crisis?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 19(1), pages 83-140.
    8. Martin H. Wolfson & Mary M. McLaughlin, 1989. "Recent developments in the profitability and lending practices of commercial banks," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), issue Jul, pages 461-484.
    9. Huizinga, Harry, 1989. "How has the debt crisis affected commercial banks?," Policy Research Working Paper Series 195, The World Bank.
    10. Martin H. Wolfson, 1990. "The Causes of Financial Instability," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 12(3), pages 333-355, March.
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