Banking Research in the Time of COVID-19
82 Pages Posted: 10 Sep 2021
Date Written: September 9, 2021
Despite the devastating worldwide human and economic tolls of the COVID-19 crisis, it has created some positive economic and financial surprises and opportunities for research. We highlight two such favorable surprises – the shortest U.S. recession on record and the avoidance of any banking crisis – and a number of research opportunities. We tie the “economic surprise” of the short recession to the speed and size of U.S. stimulus programs during COVID-19 – faster and larger than for the Global Financial Crisis (GFC). We connect the “financial surprise” of the resilient banking sector to prudential policies put in place during and after the GFC that fortified U.S. banks prior to COVID-19. These twin “surprises” are also mutually reinforcing – if either the economy or banking system had failed, so would the other. We also review extant COVID-19 banking research and suggest paths for future research. We recommend particular attention be paid to research outside of the U.S. – where fewer favorable “surprises” may be present – to best advance the knowledge.
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