Big bank, small bank: Monetary policy implementation and banks' reserve management strategies
Abstract This paper provides estimates of banks' demand for excess reserve balances on a period average basis for the period from 2005 to mid-2008. Consistent with theoretical work, we find that the demand for excess depends critically on uncertainty of flows in and out of reserve accounts. We also document the variability of demand for excess reserve balances by institution size, evaluate different models for forecasting demand for excess on a period average basis, and report the forecasting performance of each of these models.
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