The cost of government deposits for black-owned commercial banks
- 31 Downloads
This article utilizes a Statistical Cost Accounting Model and Mean Variance Model to estimate the cost and potential risk impact of government deposits for black-owned commercial banks. The main findings are that relative to other types of deposits on the balance sheet, government deposits are expensive, and that deposits received through the Minority Bank Deposit Program may have the effect of increasing risk in the asset portfolio.
KeywordsTotal Asset Balance Sheet Equity Capital Portfolio Weight Asset Portfolio
Unable to display preview. Download preview PDF.
- 2.See J. T. Boorman, “The Prospects for Minority-Owned Commercial Banks: A Comparative Performance Analysis,”Journal of Bank Research, 4 (1974) 263–267.Google Scholar
- 5.See J. T. Rose and J. D. Wolken, “Statistical Cost Accounting Models in Banking: A Reexamination and an Application,”Staff Studies, No.150 (1986), Board of Governors of the Federal Reserve System, Washington, D.C. For a more recent application see Thomas P. Bundt and Robert Schweitzer, “Deregulation, Deposit Markets, and Banks’ Costs of Funds,”The Financial Review, 24 (1989) 417–430.Google Scholar
- 7.See Title 31, Code of Federal Regulations, part 202, section 6, (31 CFR 202.6).Google Scholar
- 9.See for example W. B. Arthur, “On Learning and Adaptation in the Economy,”Santa Fe Institute Working Paper, 92-07-038 (1992).Google Scholar
- 10.A data appendix is available upon request from the author.Google Scholar
- 11.See Boorman (1974).Google Scholar
- 14.See Rose and Wolken (1986).Google Scholar
- 15.The vector of nonnegative weights is relevant because for the class of assets in which the SCAM is estimated, short positions are not permissible. For the types of assets that commercial banks can hold short see Report of Condition, Schedule RCL, Board of Governors of the Federal Reserve System, Washington, D.C., various years.Google Scholar
- 16.See Brewer (1988).Google Scholar