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The Effects of Interest-Bearing Required Reserves on Bank Portfolio Riskiness

Published online by Cambridge University Press:  06 April 2009

Douglas W. Mitchell
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Extract

This paper uses the portfolio theory approach to bank behavior theory in order to examine the effects of two Fed policy variables on bank portfolio riskiness. The policy variables are (1) the level of the reserve requirement against NOW accounts, and (2) the rate of interest paid by the Fed on bank reserves. This second policy variable is currently zero-valued in nominal terms, but in recent years there has been some discussion of raising it, especially now that interest is paid by banks on checkable accounts. (For an early discussion see Tobin [8].)

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , Volume 17 , Issue 2 , June 1982 , pp. 209 - 216
Copyright
Copyright © School of Business Administration, University of Washington 1982

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References

REFERENCES

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