Postmortem on the Federal Reserve's Functional Cost Analysis Program: how useful was the FCA?

Evren Ors

Review of Financial Economics, 2004, vol. 13, issue 1-2, 121-148

Abstract: I conduct a postmortem analysis on the now defunct Functional Cost Analysis (FCA) Program. I examine whether FCA banks were representative of U.S. bank population. I assess the costs and benefits of participation in a selection model and test whether participation in the program improves bank cost and profit efficiency. I find that FCA banks are not statistically representative of the universe of U.S. banks, but the differences are economically small. I also find that participation adds little, if any, improvement to performance. It would appear that the Federal Reserve System (the Fed) was justified in ending a subsidized service to community banks.

Date: 2004
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https://doi.org/10.1016/j.rfe.2003.06.002

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Persistent link: https://EconPapers.repec.org/RePEc:wly:revfec:v:13:y:2004:i:1-2:p:121-148

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