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Chicago Fed Letter, No. 160, December 2000
Recent Trends in Deposit and Loan Growth: Implications for Small and Large Banks

Bank deposit growth is declining. At the end of June 2000, deposits funded only two-thirds of bank assets, compared with 77% at the end of 1992. Core deposits (total deposits less time deposits larger than $100,000), the banks’ bread-and-butter source of funding, have declined at an even faster rate, from 62% of total bank assets in 1992 to 46% at the end of June 2000. Not only are banks losing a stable source of funding, but the composition of deposits and other liabilities is shifting toward more interest-sensitive instruments. Banks are relying more on deposits purchased through brokers, advances from the Federal Home Loan Bank System and volatile liabilities.



Federal Reserve Bank of Chicago, 230 South LaSalle Street, Chicago, Illinois 60604-1413, USA. Tel. (312) 322-5322

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