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  2. 2018
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Regional Banking Instability and FOMC Voting

This study analyzes if regionally affiliated Federal Open Market Committee (FOMC) members take their districts’ regional banking sector instability into account when they vote. Considering the period 1979–2010, we find that a deterioration in a district's bank health increases the probability that this district's representative in the FOMC votes to ease interest rates. According to member-specific characteristics, the effect of regional banking sector instability on FOMC voting behavior is most pronounced for Bank presidents (as opposed to Governors) and FOMC members who have career backgrounds in the financial industry or who represent a district with a large banking sector.

15. February 2018

Authors Stefan Eichler Tom Lähner Felix Noth

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Keywords

financial stability FOMC voting financial instability Dodd-Frank Act

JEL Classification

E43 E52 E58 G21

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Professor Dr Stefan Eichler
Professor Dr Stefan Eichler

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Dr Wolfgang Sender
Dr Wolfgang Sender
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