Federal Home Loan Bank advances and commercial bank portfolio composition

W Frame, Diana Hancock and Wayne Passmore

No 2007-17, FRB Atlanta Working Paper from Federal Reserve Bank of Atlanta

Abstract: This paper considers the role of Federal Home Loan Bank (FHLB) advances in stabilizing their commercial bank members' residential mortgage lending activities. Our theoretical model shows that using mortgage-related membership criteria or requiring mortgage-related collateral does not ensure that FHLB advances will be put to use for stabilizing members' financing of housing. Using panel vector autoregression (VAR) techniques, we estimate recent dynamic responses of U.S. bank portfolios to FHLB advance shocks, bank lending shocks, and macroeconomic shocks. Our empirical findings suggest that FHLB advances are just as likely to fund other types of bank credit as to fund single-family mortgages.

Date: 2007
New Economics Papers: this item is included in nep-ban and nep-mac
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Related works:
Journal Article: Federal Home Loan Bank Advances and Commercial Bank Portfolio Composition (2012)
Journal Article: Federal Home Loan Bank Advances and Commercial Bank Portfolio Composition (2012)
Working Paper: Federal Home Loan Bank advances and commercial bank portfolio composition (2007)
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