Discussion Paper

Part II: Why Do Banks Keep All That “Fracking” Money?

Abstract: In a recent post, I discussed the significant impact that ?fracking? and other unconventional energy development has had on bank deposits. Using this deposit windfall, I estimated how banks allocate these funds, finding that over the recent business cycle they reduced the portion used for loans. In this post, I will discuss what may have influenced the decision to lend these funds or to hold liquid assets like cash or securities.

Keywords: Business Cycle; Liquidity; Financial Intermediation;

JEL Classification: G2;

Bibliographic Information

Provider: Federal Reserve Bank of New York

Part of Series: Liberty Street Economics

Publication Date: 2014-12-03

Number: 20141203