Directions: Please limit the written response to 6 pages of text, plus an executive summary of 

up to 1 page. References and up to 6 pages of figures and tables do not count against this 

limit. All figures and tables should be self-contained, referenced in the text, and included at 

the end of the document. Text should be single spaced in Times New Roman font, 12 pt, with 

1” margins on all sides of the page.

Question: What do you view as the most significant impacts of the COVID-19 pandemic on the 

banking sector, and what lessons can be learned and implemented by financial regulators?

The COVID-19 pandemic has affected many areas of the U.S. economy, including 

unemployment, economic (fiscal and monetary) policies, consumer demand, physical work 

locations, and housing prices. The pandemic has also had many significant implications for

the banking sector, including the creation of new loan programs, shifts in consumer 

preferences, changes in depositor behavior, and changes in loan demand and supply. As 

society recovers from the pandemic, financial regulators will absorb the lessons learned from 

the pandemic and prepare to carry out their missions in the post-pandemic “new normal” of 

the financial sector.

Your goal is to determine which pandemic-related issues in the U.S. banking sector are of 

greatest significance and then use your analysis to motivate specific policy 

recommendations. In the interest of brevity, focus on up to three issues that your team deems 

most important and motivate your choice. The quality of your analysis is more important 

than the quantity of issues that you discuss. There is no penalty for pursuing fewer than three 

issues. The next section gives examples of areas where experts observe some changes in the 

banking sector during the pandemic or believe that changes will occur in the future because 

of the pandemic. You may use any of these in your answer or put forth your own topics.

The analysis of your chosen topics should rely as much as possible on empirical evidence 

(e.g., graphical, statistical, and econometric analysis), but other types of evidence (e.g., 

interviews with industry experts) can be used as required.

Described below are available data sources that could help illustrate your arguments, but you 

may use other publicly available data as desired.

• The Federal Deposit Insurance Corporation (FDIC) releases (1) quarterly data on the 

business behavior of community, regional, and national banks through Call Reports, 

which are available from the Federal Financial Institutions Examination Council 

(FFIEC), and (2) annual data on the location of physical bank offices through the 

Summary of Deposits.

• The U.S. Census Bureau (Census) produces a bi-weekly online Household Pulse Survey 

studying the social and economic impacts of the coronavirus on U.S. households.
• The U.S. Small Business Administration (SBA) provides data related to the Paycheck 

Protection Program, a loan program created in response to the pandemic and 

targeted to small businesses.

• Johns Hopkins University (JHU) administers the COVID-19 Data Repository, which 

collects data on COVID-19 testing, cases, deaths, vaccinations, and government 

response policies at various levels of geography.

Part I: Conceptual Framework

Develop a concise conceptual framework that discusses potential ways in which the 

pandemic has affected the banking sector. Use this framework to motivate hypotheses to 

illustrate with data, as described in the following sections. You can focus on economic, 

demographic, and socioeconomic outcomes, including employment, personal income, 

access to credit, or other important measures.

The following are some examples of issues that your conceptual framework could address.

• How has consumer confidence changed during the pandemic, and how have these 

changes affected the banking sector?

• How have consumer payment methods and banking preferences changed as a result 

of the pandemic, and how may these changes affect banks?

• How has the pandemic affected bank deposits, and what do these changes mean for 

banks, borrowers, and the FDIC?

• How has demand for and access to business loans changed as a result of the 

pandemic?

• How have changes in housing prices compared to those during the previous financial 

crisis, and what are the implications for mortgage markets?

• What has been the impact of foreclosure and eviction moratoria on lenders?

• How have financial assistance payments to households (e.g., direct payments and 

unemployment enhancements) affected banks?

• How has the pandemic affected banks’ sources of income (e.g., interest vs. noninterest income)? 

Part II: Empirical Analysis

Using the data available through the FFIEC, FDIC, Census, SBA, JHU, and/or other publicly

available sources, describe changes over time or differences across groups (banks, 

geographic areas) in the outcome measures proposed in the previous section. In your 

analysis, it may be helpful to compare banks that are more likely to be affected by the issues 

you study to banks that are less likely to be affected by those issues. Depending on the

structure of your analysis, you may choose to include all geographic areas and/or focus on 

specific areas where you may be more familiar with local regulations and the economic 

environment.
Part III: Interpreting the Empirical Findings

Describe and discuss how the patterns you have identified support your hypotheses. It may 

be helpful to address the following questions, though you are encouraged to develop and 

address questions that relate to your specific approach.

• For the measures you examined, what differences exist between banks?

• Do these differences match up with the predictions from your conceptual framework?

• Are there geographic, industry, or bank characteristics that appear to amplify or 

weaken the effects of the pandemic-induced changes on banks?

It is important to assess your findings critically and understand the limitations of your 

analysis. In this regard, it may be helpful to address the following questions.

• Why might your findings be related to the COVID-19 pandemic?

• Why might they not be related to the pandemic, i.e., what other factors could explain 

the data patterns you have discovered?

• What factors should be considered when determining if a data pattern is related to the 

pandemic?

Part IV: Policy Implications

The FDIC, working with other banking regulators, examines and supervises thousands of 

banks for safety and soundness and compliance with consumer protection laws. The FDIC 

also reviews and approves applications for deposit insurance, an important step in opening a 

new bank. Include in your write-up a consideration of the role that the FDIC has in regulating 

the banking sector.

• Why are the changes that you have examined of particular interest for bank regulators 

such as the FDIC?

• Should any of the changes affecting the banking sector that you have identified be 

met with particular responses from FDIC? If yes, explain your proposed course(s) of 

action. If not, explain why inaction is the best response.

• If the FDIC implemented your policy recommendations, what might the impact be on 

the banking sector? On the economy more broadly?