Officer Opinion Research Articles

Diseases neglected by the media and strategies for visibility from the viewpoint of key actors

Although health is a recurrent topic in newspapers, some diseases are visibly excluded from this coverage, originating diseases neglected by the media. The goal of this study was to identify - based on the opinion of journalists, press officers, health managers, and government health advisors - these diseases along with strategies for dealing with media neglect. The qualitative study was based on 19 semi-structured interviews with key actors. Data was submited to thematic content analysis using Maxqda software. The neglected diseases include infectious and parasitic diseases, rare diseases, periodontal diseases, cancer, and work-related illnesses.

Consumer risk appetite, the credit cycle and the housing bubble

In this paper, we explore the role of consumer risk appetite in the initiation of credit cycles and as an early trigger of the US mortgage crisis. We analyze a panel data set of mortgages originated between 2000 and 2009 and follow their performance up to 2014. After controlling for all of the usual observable effects, we show that a strong residual vintage effect remains. This vintage effect correlates well with consumer mortgage demand, as measured by the Federal Reserve Board’s Senior Loan Officer Opinion Survey, and with changes in mortgage pricing at the time the loan was originated. Our findings are consistent with an economic environment in which the incentives of low-risk consumers to obtain a mortgage decrease when the cost of obtaining a loan rises. As a result, mortgage originators generate mortgages from a pool of consumers with changing risk profiles over the credit cycle. The unobservable component of the shift in credit risk, relative to the usual underwriting criteria, may be thought of as macroeconomic adverse selection.

The Views of Ex-Police Officers on Child Abuse Case Attrition in the United Kingdom.

Attrition in child abuse cases is of continuing concern. International research has produced evidence to suggest that the form and quality of the evidence available in many child abuse cases is of insufficient quality to allow progression through the judicial system. Recent revelations have led to an increase in public and professional awareness of the prevalence of child sexual abuse, and how this is managed by the legal and social care systems. The aim of this research was to explore the opinions of ex-Police Officers who had direct experience relating to the management of child abuse cases about the factors affecting case progression. Seven ex-Police Officers were interviewed and the transcribed data were thematically analyzed. The five main themes derived from the data were Global Myths, Assumptions, and Misconceptions; Suitability; Resources; Professionals' Attributes; and Working Together. These themes demonstrated that the primary issues indicated by ex-Police Officers were more about relationships between professionals, an understanding of the child's perspective, and their subsequent involvement in the legal processes than simply being related to a lack of resources.

Police Officers’ Perceptions of Body-Worn Cameras in Buffalo and Rochester

Police body-worn cameras have been advanced as a solution to disparate perceptions among the citizenry, public officials, community leaders, and the police themselves in the highly contested arena of police-citizen encounters. As with previous innovations in policing it is important that programs or policies developed for street-level application be planned in advance, and the opinions of police officers should be understood prior to implementation. This study provides survey responses from police officers in Buffalo and Rochester regarding their perceptions of body-worn cameras. Survey items were borrowed from prior research in Phoenix and Los Angeles. It also included items intended to measure the officer’s opinions about examining camera images prior to writing a report, an issue that is the subject of some disagreement among policy makers. Findings suggest similar attitudes toward body cameras not only among Buffalo and Rochester police officers, but also with police officers in other agencies. Almost all respondents agree or strongly agree that police officers should have the ability to review body camera images prior to writing a report. The policy implications of this finding are discussed.

Cost Accounting as a Possible Solution for Financial Sustainability of Croatian Public Hospitals

The purpose of this paper is to present the current usage of cost accounting methodology in Croatian public hospitals through conducted empirical research and to provide opinions of accountants and financial officers regarding possible implementation of cost accounting methodology in public hospitals. In the paper, the authors analyze the accounting system in Croatian public hospitals, identifying the flaws of the current accounting system with regard to the recording and allocation of costs. National healthcare systems of different European countries provide a theoretical background for the usage of accrual accounting basis and cost accounting methodologies, showing better governance and financial sustainability of public hospitals which have introduced cost accounting methodology. The conducted empirical research shows that accountants and financial officers believe that the healthcare system in Croatia is ready for a change in the current accounting system based on the modified accrual basis through the implementation of accrual accounting basis and full costing approach to cost allocation. Full costing approach is also known as activity- based accounting method for cost allocation. The authors also recommend some initial steps for implementation of the new cost accounting system in Croatian public hospitals.

Evidence of Forward-Looking Loan Loss Provisioning with Credit Market Information

Our paper makes a fundamental contribution by studying loan loss provisioning over the credit cycle as three distinct phases. Looking at the three distinct phases of the financial crisis – the pre-crisis period, crisis period, and post-crisis period – is important as loan loss provisioning is driven by different factors in each, in part due to extensive shifts in (or in the application of) regulatory rule. Controlling for credit market information using data from the Senior Loan Officer Opinion Surveys (SLOOS) we extend the work of previous studies of forward-looking loan loss provisions using the delayed expected loss recognition approach. We contribute to the growing literature on forward-looking loan loss provisioning and early in the cycle loss recognition by incorporating a broader range of available credit information and explicitly controlling for structural breaks in the sample corresponding to the financial crisis.

A method‐centric ‘User Manual’ for the mitigation of diffuse water pollution from agriculture

AbstractWe describe the development of a manual of methods for mitigating diffuse water pollution from agriculture and its important influence on policy and practice in England and Wales. The objective of the ‘User Manual’ was to provide policy makers and those implementing policies with information about the cost, effectiveness and applicability of potential methods in a form that would be readily understood by non‐specialists. The ‘User Manual’ was based on earlier reports synthesizing available research data and, where data were unavailable, used expert elicitation. The outcome generated 44 potential methods (under the broad categories of land use, soil management, livestock management, fertilizer management, manure management and farm infrastructure) and described the simultaneous impact of applying each method on losses of nitrate, phosphorus and faecal indicator organisms relative to baseline losses. Estimates of cost and effectiveness were presented at the whole‐farm level for seven model farm types. Methods differed widely in their cost‐effectiveness and applicability to the different model farms. Advantages and limitations of the approach are discussed and subsequent developments of the original ‘User Manual’ are described, together with the opinions of catchment officers who have used the ‘User Manual’ to implement mitigation methods on farms.

The Real Consequences of Bank Mortgage Lending Standards

Bank loan underwriting standards are important for credit availability. We match the Federal Reserve’s Senior Loan Officer Opinion Survey with the Home Mortgage Disclosure Act and other datasets over 1990 to 2013. Tightened standards are associated with a 1 percentage point increase in application denial rates – more for banks holding more loans on balance sheet – and a 16 percent decrease in riskier loans. Markets with more exposure to banks tightening standards see mortgage delinquency rates fall by 3 percentage points two years later, and house prices, sales of newly-constructed homes, and residential construction employment decline by 2.5, 9, and 6.5 percent, respectively

Credit conditions and stock return predictability

U.S. stock return predictability is analyzed using a measure of credit standards (Standards) derived from the Federal Reserve Board׳s Senior Loan Officer Opinion Survey on Bank Lending Practices. Standards is a strong predictor of stock returns at a business cycle frequency, especially in the post-1990 data period. Empirically, a tightening of Standards predicts lower future stock returns. Standards performs well both in-sample and out-of-sample and is robust to a host of consistency checks. Standards captures stock return predictability at a business cycle frequency and is driven primarily by the ability of Standards to predict cash flow news.

A New Mortgage Credit Availability Index

There is no question that lending standards at the height of the bubble were way too loose and the system took on too much risk. The post-crisis period, however, is often characterized at the other extreme—with credit so tight that it has hampered the recovery. In this article, the authors develop a simple intuitive, transparent measure of credit availability based on the aggregate probability of default of a particular vintage at the time of origination. That is, if mortgage loans made at every point in time were expected to face the same probability of different economic scenarios (with respect to home prices, interest rates, and so on), how would the probability of default compare across origination dates? The article first discusses the limitations of the four most commonly cited indicators of mortgage credit accessibility, the Federal Reserve’s Senior Loan Officer Opinion Survey on Bank Lending Practices (SLO); the mortgage application denial rates based on annual Home Mortgage Disclosure Act (HMDA) data; the Mortgage Credit Availability Index by the Mortgage Bankers Association (MBA); and the median borrower’s credit score at origination. The article then describes the development of a new index that distills borrower credit profiles, loan products and terms, and macroeconomic conditions into a measurement of the weighted average probability of default for mortgages originated at a given time. The article illustrates the value of this measure by empirically exploring the varying risk appetites of the market as a whole as well as of individual market segments, which directly aids evidence-based policymaking on how to open the tight credit box.

Relation Between Levels and Changes in Lending Standards Reported by Banks in the Senior Loan Officer Opinion Survey on Bank Lending Practices

This note uses bank-level answers to the Senior Loan Officer Opinion Survey on Bank Lending Practices (SLOOS) to investigate the relation between levels and changes in lending standards reported by banks. We provide evidence that banks' responses about levels and changes in standards are positively correlated, although this relationship is not clear in summary statistics. These results suggest that banks’ responses to the quarterly SLOOS questions and their annual counterparts contain independent information about their lending practices.

Did Consumers Want Less Debt? Consumer Credit Demand versus Supply in the Wake of the 2008-2009 Financial Crisis

We explore the sources of household balance sheet adjustment following the collapse of the housing market in 2006. First, we use microdata from the Federal Reserve Board’s Senior Loan Officer Opinion Survey to document that banks cumulatively tightened consumer lending standards more in counties that experienced a house price boom in the mid-2000s than in non-boom counties. We then use the idea that renters, unlike homeowners, did not experience an adverse wealth shock when the housing market collapsed to examine the relative importance of two explanations for the observed deleveraging and the sluggish pickup in consumption after 2008. First, households may have optimally adjusted to lower wealth by reducing their demand for debt and implicitly, their demand for consumption. Alternatively, banks may have been more reluctant to lend in areas with pronounced real estate declines. Our evidence is consistent with the second explanation. Renters with low risk scores, compared to homeowners in the same markets, reduced their levels of nonmortgage debt and credit card debt more in counties where house prices fell more. The contrast suggests that the observed reductions in aggregate borrowing were more driven by cutbacks in the provision of credit than by a demand-based response to lower housing wealth.

Did Consumers Want Less Debt? Consumer Credit Demand Versus Supply in the Wake of the 2008-2009 Financial Crisis

We explore the sources of household balance sheet adjustment following the collapse of the housing market in 2006. First, we use microdata from the Federal Reserve Board’s Senior Loan Officer Opinion Survey to document that banks cumulatively tightened consumer lending standards more in counties that experienced a house price boom in the mid-2000s than in nonboom counties. We then use the idea that renters, unlike homeowners, did not experience an adverse wealth shock when the housing market collapsed to examine the relative importance of two explanations for the observed deleveraging and the sluggish pickup in consumption after 2008. First, households may have optimally adjusted to lower wealth by reducing their demand for debt and implicitly, their demand for consumption. Alternatively, banks may have been more reluctant to lend in areas with pronounced real estate declines. Our evidence is consistent with the second explanation. Renters with low risk scores, compared to homeowners in the same markets, reduced their levels of nonmortgage debt and credit card debt more in counties where house prices fell more. The contrast suggests that the observed reductions in aggregate borrowing were more driven by cutbacks in the provision of credit than by a demand-based response to lower housing wealth.

Changes in Bank Lending Standards and the Macroeconomy

Identifying the macroeconomic effects of credit supply disruptions is difficult because many of the same factors that influence the supply of bank loans can also affect the demand for credit. Using bank-level responses to the Federal Reserve's Senior Loan Officer Opinion Survey, we decompose the reported changes in lending standards--a commonly-used indicator of changes in credit supply conditions--into a component that captures the change in banks' lending posture in response to bank-specific and macroeconomic factors that also affect loan demand and a residual component, which provides a cleaner measure of fluctuations in the effective supply of bank-intermediated credit. When included in a standard VAR framework, shocks to our measure of loan supply are associated with substantial declines in output and in the capacity of businesses and households to borrow from the banking sector, as well as with a sharp widening of credit spreads and a significant easing of monetary policy. We corroborate the interpretation of our series as movements in the supply of bank loans using a detailed loan-level data set: A regression of individual loan amounts on the corresponding interest rate spreads--where the latter is instrumented with our bank-level loan-supply shifter--yields the semi-elasticity of loan demand between -1.0 and -1.5.

Changes in bank lending standards and the macroeconomy

Identifying macroeconomic effects of credit shocks is difficult because many of the same factors that influence the supply of loans also affect the demand for credit. Using bank-level responses to the Federal Reserve's Loan Officer Opinion Survey, we construct a new credit supply indicator: changes in lending standards, adjusted for the macroeconomic and bank-specific factors that also affect loan demand. Tightening shocks to this credit supply indicator lead to a substantial decline in output and the capacity of businesses and households to borrow from banks, as well as to a widening of credit spreads and an easing of monetary policy.

Mortgage Lending Underwriting Standards During the Housing Market Boom: Examiners' and Bankers' Views

It is by now widely acknowledged that the too-lenient trend in residential mortgage underwriting standards over the past half-dozen years was a key factor propelling the housing boom, and is a principal reason that the “bust” now underway has spiraled into a broad-based credit crisis. Importantly, comprehensive, economy-wide documentation for mortgage lending underwriting trends (as compared to institution-specific analysis) is sparse. Hence, although industry observers understand this fundamental basis for the current turmoil in the financial system, a clear accounting of the nature and scope of underwriting trends is lacking. Indeed, the Federal Reserve Board’s Senior Loan Officer Opinion Survey on Bank Lending Practices (“Senior Loan Officer Survey”) is the only well-known economy-wide source of data on mortgage underwriting trends. However, the Senior Loan Officer Survey provides a relatively limited gauge of those trends: the quantitative information it provides is simply the net percent of surveyed banks easing mortgage underwriting standards in a given quarter. The OCC has developed a tool that addresses the dearth of detailed knowledge about the nature and scope of mortgage lending underwriting by banks: the agency’s annual Survey of Credit Underwriting Practices (“Examiner Survey”). That survey, which collects responses from examiners on their views about national banks’ underwriting practices, contains a much broader and deeper set of information than the Federal Reserve survey of senior bankers. Although heretofore the agency has not done so, as this Staff Report shows, it is possible to compare examiners’ perspectives on mortgage underwriting trends, as reflected in the OCC’s survey, with bankers’ views on these trends, as reflected in the Federal Reserve survey. In addition, because the Examiner Survey includes detailed information on specific mortgage underwriting practices not covered by the Federal Reserve survey, analysis of the OCC data can yield insights about the mortgage market not available from the Senior Loan Officer Survey.The primary purpose of this Policy Analysis Staff Report is to provide the first systematic comparison of bankers’ perspectives on mortgage underwriting trends, as reflected in the well-known Senior Loan Officer Survey, with examiners’ perspectives reflected in the OCC’s underwriting survey. One major observation emerging from the analysis is that bankers’ and examiners’ assessments of mortgage underwriting trends were roughly consistent with each other, especially during 2004-2006, when both groups reported persistent easing. The main exception is for the late-2006-early-2007 period, when bankers claimed they tightened mortgage underwriting standards sharply. OCC examiners did not agree, seeing instead a slight, but nevertheless continuing, easing of mortgage lending standards. Were OCC examiners correct in their significantly different assessment at that point? In the absence of a comparable “third party” set of information on underwriting practices it is not possible to answer that question definitively. Nevertheless, subsequent analysis in this Staff Report showing a strong consistency between examiners’ summary or overall assessment of underwriting practices, and their assessments of specific, detailed components of mortgage underwriting practices enhances the credibility of examiners’ story.

The OCC's Examiner Survey of Credit Underwriting Practices: A New Quantification Scheme, and a Comparison with the Federal Reserve's Senior Loan Officer Survey

Consumer lending continues to grow in importance for the banking industry, and consumer lending practices continue to make headlines, attracting the attention of consumer groups as well as policymakers, including in particular several Congressional committees. In this environment, supervisory authorities continue to hone their insights into the nature and consequences of consumer lending. Many different sources of information can aid in achieving this goal. This Staff Report focuses on information that has perhaps been underutilized: the OCC’s annual Survey of Credit Underwriting Practices (“Examiner” survey). One purpose of this paper is to explain how the analytical value of the Examiner survey can be enhanced via the application of a simple indexing scheme. The indexing scheme is patterned directly on that employed by the Federal Reserve for the quantification of information collected and published in its quarterly Senior Loan Officer Opinion Survey on Bank Lending Practices (“Senior Loan Officer”survey). The second purpose of this Staff Report is to demonstrate the value of the indexing scheme by comparing the OCC’s Examiner survey with the Federal Reserve’s Senior Loan Officer survey. The focus in particular is on the credit card underwriting portions of both surveys; in effect, the comparison is between bankers’ perspectives (from the Federal Reserve survey) and examiners’ perspectives (from the OCC survey). Such a comparison is useful to ascertain the degree to which there is consistency between bankers’ and examiners’ perspectives.

Changes in Bank Lending Standards and the Macroeconomy

Identifying the macroeconomic effects of credit supply disruptions is difficult because many of the same factors that influence the supply of bank loans can also affect the demand for credit. Using bank-level responses to the Federal Reserve's Senior Loan Officer Opinion Survey, we decompose the reported changes in lending standards -- a commonly-used indicator of changes in credit supply conditions -- into a component that captures the change in banks' lending posture in response to bank-specific and macroeconomic factors that also affect loan demand and a residual component, which provides a cleaner measure of fluctuations in the effective supply of bank-intermediated credit. When included in a standard VAR framework, shocks to our measure of loan supply are associated with substantial declines in output and in the capacity of businesses and households to borrow from the banking sector, as well as with a sharp widening of credit spreads and a significant easing of monetary policy. We corroborate the interpretation of our series as movements in the supply of bank loans using a detailed loan-level data set: A regression of individual loan amounts on the corresponding interest rate spreads -- where the latter is instrumented with our bank-level loan-supply shifter -- yields the semi-elasticity of loan demand between 1.0 and 1.5b.

Capturing the Evolution of Dealer Credit Terms Related to Securities Financing and OTC Derivatives: Some Initial Results from the New Senior Credit Officer Opinion Survey on Dealer Financing Terms

In the period prior to the financial crisis, leverage in the financial system increased substantially. This buildup was likely facilitated by, among other factors, a loosening of credit terms related to OTC derivatives and securities financing transactions. However, little or no systematic data on these trends were available at the time. The new Senior Credit Officer Opinion Survey on Dealer Financing Terms, which was conducted for the first time in June 2010, partially fills this gap. The new survey provides qualitative information about changes in credit terms and conditions across the entire range of these transactions, and the evolution of market conditions and conventions applicable to such activities.

Credit Conditions and Expected Stock Returns

We analyze U.S. stock return predictability using a measure of credit standards (Standards) derived from the Federal Reserve Board's Senior Loan Officer Opinion Survey on Bank Lending Practices. Standards is a strong predictor of stock returns at a business cycle frequency, especially in the post-1990 data period. Empirically, a tightening of Standards predicts lower future stock returns. Standards performs well both in-sample and out-of-sample and is robust to a host of consistency checks. Standards captures stock return predictability at a business cycle frequency and is driven primarily by the ability of Standards to predict cash flow news.