Bank size, collateral, and net purchase behavior in the Federal Funds Market: empirical evidence

Article Abstract:

The net purchase behavior of uncollaterized federal funds (FF) by banks was researched using data on banks' FF and collateralized repo purchases and sales collected by the Federal Financial Institutions Examinations Council. Research results support the validity of significant seasonal and size effects in the purchase of collateralized and uncollaterized liabilities. Large banks are more likely to be net purchasers of FF than relatively smaller banks because large banks are located in major banking centers. Results also indicate that smaller banks located away from major banking centers tend to be net sellers of FF. Additionally, results indicate money-center-located banks tend to view uncollateralized FF as a major source of funds, while small banks are observed to use the collaterialized repo market as a net source of funds far more than larger banks do.

Banking industry, Finance, Secured transactions, Federal funds market (United States)

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Dividend stripping, risk exposure, and the effect of the 1984 Tax Reform Act on ex-dividend day behavior

Article Abstract:

The effects of the Tax Reform Act of 1984 and risk exposure on ex-dividend day behavior are examined. The increase in risk exposure brought on by the Act inhibited short term trading activities. Non-optional stocks were affected much more than stocks which could have the risk reduced through hedged dividend stripping.

Investments, Risk management

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