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The decline in core deposits : what can banks do?


  • James Harvey
  • Kenneth Spong


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.

Suggested Citation

  • James Harvey & Kenneth Spong, 2001. "The decline in core deposits : what can banks do?," Financial Industry Perspectives, Federal Reserve Bank of Kansas City, issue Dec, pages 35-48.
  • Handle: RePEc:fip:fedkfi:y:2001:i:dec:p:35-48

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    References listed on IDEAS

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    Cited by:

    1. Memmel, Christoph & Schertler, Andrea, 2009. "The dependency of the banks' assets and liabilities: evidence from Germany," Discussion Paper Series 2: Banking and Financial Studies 2009,14, Deutsche Bundesbank.
    2. Distinguin, Isabelle & Roulet, Caroline & Tarazi, Amine, 2013. "Bank regulatory capital and liquidity: Evidence from US and European publicly traded banks," Journal of Banking & Finance, Elsevier, vol. 37(9), pages 3295-3317.
    3. Isabelle Distinguin & Caroline Roulet & Amine Tarazi, 2012. "Bank regulatory Capital Buffer and Liquidity: Evidence from US and European Publicly Traded Banks," Working Papers hal-00918468, HAL.


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