Journal Article

The decline in core deposits : what can banks do?

Abstract: In recent years, growth in traditional deposit funding sources has failed to match the growth in assets at many banks. These funding shortfalls are raising a number of important concerns, including whether community banks will have to curtail lending to small businesses, farmers, and other local customers. This article takes a look at bank funding trends and their implications for community banks. The article also examines possible explanations for the trends, such as strong loan demand, shifts in household financial portfolios, new competition, comparative returns on other financial instruments, and changing demographics in community banking markets. The final section of the article then explores the options and strategies community banks can use to address their funding challenges.

Keywords: Federal Reserve District, 10th; Banks and banking; Bank deposits;

Bibliographic Information

Provider: Federal Reserve Bank of Kansas City

Part of Series: Financial Industry Perspectives

Publication Date: 2001

Issue: Dec

Pages: 35-48