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Economic cycles and bank health

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  • John S. Jordan
  • Eric Rosengren

Abstract

Over the past two decades the United States has experienced substantial increases in the number of bank failures, however, surprisingly few banks have failed during the 2001 recession. This paper explores the relationship between economic cycles and bank health. We find that economic forecasts provide little additional information over bank-specific financial data during prosperous times, possibly because bank problems during these times are likely to be idiosyncratic to individual management decisions. However, economic forecasts become relevant during troubled economic periods, with poor economic conditions hindering a broader set of institutions.

Suggested Citation

  • John S. Jordan & Eric Rosengren, 2002. "Economic cycles and bank health," Conference Series ; [Proceedings], Federal Reserve Bank of Boston.
    • Handle: RePEc:fip:fedbcp:y:2002:x:5
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    File URL: http://www.bostonfed.org/bankinfo/conevent/slowdown/jordanrosen.pdf
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    References listed on IDEAS

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    Cited by:

    1. Lakshmi Balasubramanyan & Joseph G. Haubrich, 2014. "What do we know about regional banks? An exploratory analysis," Working Papers (Old Series) 1316, Federal Reserve Bank of Cleveland.
    2. G. Lanine & R. Vander Vennet, 2005. "Failure prediction in the Russian bank sector with logit and trait recognition models," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 05/329, Ghent University, Faculty of Economics and Business Administration.
    3. R. Vander Vennet & O. De Jonghe & L. Baele, 2004. "Bank risks and the business cycle," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 04/264, Ghent University, Faculty of Economics and Business Administration.

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    Keywords

    Bank failures;

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