Public Service or Private Benefits? Bankers in the Governance of the Federal Reserve System

58 Pages Posted: 25 Aug 2016 Last revised: 9 Feb 2018

See all articles by Lamont Black

Lamont Black

DePaul University - Driehaus College of Business; Center for Financial Services

Jennifer Dlugosz

Board of Governors of the Federal Reserve System

Date Written: February 8, 2018

Abstract

Federal Reserve Banks are private corporations with boards of directors and one-third of the seats on each board are held by bankers. We investigate whether these directorships create value for banks elected between 1986 and 2013 and through what channels. The announcement of a banker’s appointment to the board of directors of a Federal Reserve Bank produces a roughly 1% cumulative abnormal return in the bank’s stock price. We find evidence consistent with value being created through certification or implicit guarantees, and access to private information about monetary policy.

Keywords: banks, political connections, financial regulation, central banks, corporate governance

JEL Classification: G28, G21, G30, E58

Suggested Citation

Black, Lamont and Dlugosz, Jennifer, Public Service or Private Benefits? Bankers in the Governance of the Federal Reserve System (February 8, 2018). Available at SSRN: https://ssrn.com/abstract=2828340 or http://dx.doi.org/10.2139/ssrn.2828340

Lamont Black

DePaul University - Driehaus College of Business ( email )

1 East Jackson Blvd.
Chicago, IL 60604-2287
United States
312-362-5617 (Phone)
312-362-6566 (Fax)

HOME PAGE: http://driehaus.depaul.edu/faculty-and-staff/faculty/Pages/black-lamont.aspx

Center for Financial Services

1 East Jackson Blvd.
Chicago, IL 60604-2287
United States

HOME PAGE: http://https://business.depaul.edu/about/centers-institutes/financial-services/Pages/default.aspx

Jennifer Dlugosz (Contact Author)

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

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