Lakshmi Balasubramanyan |

Research Economist


Lakshmi Balasubramanyan, Research Economist

Lakshmi Balasubramanyan is a research economist in the Banking Policy and Analysis Group of the Federal Reserve Bank of Cleveland. She is primarily interested in the industrial organization of banking, the impact of banking regulation on bank behavior, and real estate finance.

Prior to joining the Bank in 2011, Dr. Balasubramanyan was an assistant professor in the Scott College of Business at Indiana State University. She earned her undergraduate and master of social science degrees in economics from the National University of Singapore. She earned her MS in finance and a PhD in applied economics, both from the Pennsylvania State University.

  • Fed Publications
  • Other Publications
Title Date Publication Author(s) Type

 

October, 2014 Federal Reserve Bank of Cleveland, working paper no. 14-15 ; Working Papers
Abstract: In this paper, I attempt to amalgamate the study of leverage-ratio performance with the monitoring decisions of a profit-maximizing bank. Applying tools used in studying the industrial organization of banking, my paper serves as a first step to tying the performance differences between the leverage and risk-based constraints to the more fundamental issue of monitoring. Does a bank faced with a leverage-based capital constraint monitor its loans better than a bank under a risk-based capital constraint? In a market that is characterized by a dominant bank and fringe banks, I seek to understand if the dominant bank monitors its loan when faced with a Basel III?style leverage ratio. The results show that under certain parameter ranges, the dominant bank will monitor its portfolio when faced with a leverage-based capital constraint. The results also show that the dominant bank will not monitor its portfolio when faced with a risk-based capital constraint.

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November, 2013 Federal Reserve Bank of Cleveland, working paper no. 13-16 ; Joseph G Haubrich; Working Papers
Abstract: This study tries to get a sense of the topography of the regional banking landscape. We focus on bank holding companies and banks with $10 billion to $50 billion in assets and look for factors that potentially explain regional bank health from 2008 to 2013. Our dataset is a combination of bank Call Report data and confidential supervisory data. Our analysis shows that regional banks are not a monolithic group, and different factors explain bank safety and soundness for different types of banks.

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September, 2013 Federal Reserve Bank of Cleveland, working paper no. 13-13 ; James B Thomson; Saeed Zaman; Working Papers
Abstract: The purpose of this study is to empirically analyze if loan loss provisioning is forward-looking. Using a confidential dataset that directly helps us identify loan demand and loan supply at the bank level, we test if the banks? provisioning behavior is different before and after the crisis. We find, for the entire sample of banks, loan loss provisioning is forward-looking and statistically significant in the post-crisis period. Our results show that the top quartiles of banks in our dataset exhibit a forward-looking approach to loan loss provisioning both in the pre- and post-crisis period. From a policy perspective, the top quartile of banks in our sample is engaged in forward-looking loan loss provisioning. From an accounting stance, this may be suggestive of the largest banks being more engaged in earnings management and income smoothing than the smallest banks in our sample. However, from the banking regulation perspective, implementing forward-looking loan loss provisioning is economically intuitive and will help build a countercyclical buffer, thereby strengthening bank balance sheets.

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April, 2012 Federal Reserve Bank of Cleveland, working paper no. 12-09 ; David D VanHoose; Working Papers
Abstract: This paper presents a dynamic model of a bank's optimal choices of imposing a binding liquidity-coverage-ratio (LCR) constraint. Our baseline balance-sheet dynamics starts with portfolio separation and no LCR constraint. Under a scenario in which regulators prohibit banks from applying securities to fulfill the LCR constraint, portfolio separation continues to hold, but deposit holdings depend on the extent to which the LCR constraint is binding. When banks are allowed to apply securities toward satisfying the constraint, portfolio separation can break down and lead to ambiguous effects on optimal dynamic loan and deposit paths. Our results indicate that under special cases in which portfolio separation holds, the LCR constraint affects bank-sheet dynamics in ways not previously recognized. As regulators move forward in implementing Basel III style LCR, it is imperative to understand the effects of the LCR constraint on bank balance-sheet dynamics.

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Title Date Publication Author(s) Type
Bank Balance Sheet Dynamics Under a Regulatory Liquidity-Coverage Ratio Constraint

 

April, 2013 Journal of Macroeconomics, vol. 37(1), pp. 53-67 ; David D VanHoose; Journal Article

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Do House Prices Impact Business Starts?

 

March, 2013 Journal of Housing Economics, vol. 22(1), pp 36-44 ; Edward Coulson; Journal Article

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Generalized Maximum Entropy Approach to Commercial Bank Size and Variance Heterogeneity in Risk

 

April, 2012 Journal of Economics and Finance, vol 36(3), pp 728-749 ; Spiro Stefanou; Jeffery R Stokes; Journal Article

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Declining Cost Efficiency as a Signal of Increasing Bank Vulnerability: An Entropy Based Approach

 

2010 Applied Economics Letters, vol. 17, no. 18, pp 1769-1778 ; Spiro Stefanou; Jeffery R Stokes; Journal Article

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How Well Is Productivity Being Priced?

 

2009 Journal of Economics and Finance, vol. 34, no. 4, pp 415-429 ; Ramesh Mohan; Journal Article

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Credit Risk Rating Migration and Unobserved Borrower Heterogeneity

 

2008 Agricultural Finance Review, vol 8, no. 2, pp 237-253. ; Jonathan B Dressler; Jeffery R Stokes; Journal Article

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