20 days old

Summer Internship - Research - Financial Markets Analyst

Federal Reserve Bank (FRB)
Philadelphia, PA 19107
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The Federal Reserve Bank of Philadelphia is one of the 12 regional Reserve Banks that, together with the Board of Governors in Washington, D.C., make up the Federal Reserve System. It helps formulate and implement monetary policy, supervises banks and bank and savings and loan holding companies, and provides financial services to depository institutions and the federal government. The Federal Reserve Bank of Philadelphia serves eastern and central Pennsylvania, southern New Jersey, and Delaware.

The Federal Reserve Bank of Philadelphia is seeking a Junior, Senior, or a recent college graduate student for a summer internship in the Bank's Research department. Students majoring in Economics, Math, or Finance will be considered.

Duties and Responsibilities :

In this project, we aim to investigate the link between aggregate investment, commercial real estate, and financial frictions by looking at firm investment decisions and how they are financed. We would like to pay particular attention to commercial real estate as there are important sectoral differences (pre and post Covid-19 pandemic) which might be useful for identification. A recent example is the retail sector. Reports prior to the pandemic indicated that 25 to 30 percent of US malls could close by 2022. The Covid-19 pandemic has accelerated that decline and an economy-wide recovery will likely have a small effect on the pre-pandemic trend. A different picture arises for online retailers and the price of properties used for storage and distribution that were in high demand prior to the pandemic and the trend has accelerated since March 2020.

Another important source of heterogeneity is one that derives from the sources of financing. Of particular importance are differences between bank and non-bank lenders (insurance companies, pension funds, REITs, GSEs, finance companies) and how likely they are to originate a commercial real estate mortgage in a particular sector as well as whether a loan satisfies the requirements to be securitized or needs to remain in the books of a financial institution. Even when looking at the banking sector there are notable differences between big and small banks. In contrast to the residential real estate sector, small and medium size regional banks hold a significant portion of commercial real mortgages (above 60 percent).

When looking at the firm distribution, we note that real estate represents a large fraction of firms' tangible assets so changes in real estate value or how it is financed can have a significant impact on firms' investment spending. For example, using data from the Flow of Funds, it is possible to show that for nonfarm noncorporate U.S. firms, real estate averages about 90% of tangible assets (which is, in turn, about 87% of total assets).

We plan to use standard data sources such as Compustat (which provides a good picture for all publicly traded firms in the US) but also data on commercial real estate loans that will allow us to identify and link borrowers and lenders using the identification strategy we developed in D'Erasmo, Moscoso Boedo, Olivero, and Sangiacomo (2020).

Posted: 2021-01-06 Expires: 2021-02-04
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Summer Internship - Research - Financial Markets Analyst

Federal Reserve Bank (FRB)
Philadelphia, PA 19107

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