Interest Rates

The 2023 banking crisis that took down four banks, including Silicon Valley Bank, by all appearances appears to have been resolved by public intervention. Yet, Viral Acharya and Raghuram Rajan argue, this leaves many of the underlying weaknesses that contributed to the bank failures unaddressed. Moreover, while the authorities’ temporary fixes have stopped the panic, the system will have to absorb more unrecognized losses over time.

In this second article on real estate in the current high-interest-rate environment, Joseph L. Pagliari Jr. explores banks’ exposure to commercial real estate, who might help fill the credit void as bank funding dries up, how the work-from-home phenomenon impacts commercial real estate prices, particularly the office sector, and what risks large urban centers face with emptied office buildings.

There are concerns among bankers and economists that commercial real estate prices are at risk of decreasing substantially. Joseph L. Pagliari, Jr. explains how commercial real estate should be priced based on current and projected inflation and interest rates. A subsequent article will explore if concerns about bank and broader economic vulnerabilities to lower CRE prices.

Nobel Laureate and bank run expert Douglas Diamond argues that the Fed’s choice to signal long-term low interest rates, and then suddenly reverse course...

A new study examines whether privately-owned banks seek political influence by offering preferred loan terms to corporate borrowers with valuable political connections, showing that...

In the years leading up to the pandemic, rising inequality created a saving glut of the rich which pushed down interest rates and fueled...

Existing fiscal and monetary policies are powerless to restore firms’ revenues during this health emergency. Many firms will soon begin having trouble meeting their...

A new study argues that declining interest rates are in fact the cause of the recent decline in competition. Corporate profits in the United States...