Bankers on Fed Boards: Is Good News for the Banks Bad News for the Fed?

48 Pages Posted: 30 Nov 2013

Date Written: November 25, 2013

Abstract

Bankers and non-bankers sit on Federal Reserve Bank Boards. In the case of banks, this may create a perception problem since the Fed supervises banks. I examine who sits on Reserve Bank boards and the market reaction to director appointments during the period 1990-2009. I document that Fed directors from the banking industry typically work for large banks. Furthermore, the average market reaction to the appointment of a firm’s officer to a Reserve Bank board is positive only for banks. My results are consistent with the idea that the Fed’s governance structure may continue to expose it to reputation risk.

Keywords: Federal Reserve, Director, Banks, Conflicts of Interest, Reputation, Perception

JEL Classification: E58, G28, G30

Suggested Citation

Adams, Renée B., Bankers on Fed Boards: Is Good News for the Banks Bad News for the Fed? (November 25, 2013). Available at SSRN: https://ssrn.com/abstract=2361190 or http://dx.doi.org/10.2139/ssrn.2361190

Renée B. Adams (Contact Author)

University of Oxford ( email )

Park End Street
Oxford, OX1 1HP
Great Britain

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