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76-3

Long-Run Deposit Variability
Chayim Herzig-Marx

Federal Reserve Bank of Chicago

♦♦♦♦♦♦♦♦♦ixixJiU
♦♦i

Research

LONG-RUN

DEPOSIT

Paper

No.

76-3

VARIABILITY

By

Chayim

Herzig-Marx

Department
Federal

The

views

and

do

Reserve
material
to

expressed

not




of

herein

stimulate
of

is

of

discussion,
the

Research

Bank

are

or
a

the

Chicago

the

those
views

of
of

the
the

authors
Federal

Federal

Reserve

System.

preliminary

nature,

is

and

authors.

of

solely

represent

Chicago

contained

permission

Reserve

necessarily

Bank

of

is

not

to

be

quoted

The

circulated
without

I.

The

variability

a month,

or

years.^

Almost

ability

of

a

of

quarter—
no

bank
has

deposits

been

attention

deposits

around

authorities

alike,

the banking

system,

the

speed

banks,

and

the

count

by

window.

considerable
growth
gets
of

and

the

determinants

of

of

The

are

necessity

deposits

purpose

variability

somewhat

explain
imagined

ad h oc

in

or

nature,
of

Keyt

necessary

and
to

Jan

provided

affiliation

Seventh

1 See,

of

e.g.,

Since

[2],

the

[4],

[5],

however,

planning

this

paper

is

around

liquidity

resort

to

the

dis­

to b e

of

conscious

of
of

in

portfolio

likely

are

spans

vari­

policy,

horizon

longer

to

recent

short-run

of

is

who

in

of

management
time wi l l

to b e g i n

to

a

trend.

growth

be

examine

Model

models
the

to b e

sense

around

a

supplied
and

on

the

discussed

that

a

growth

are many

data

information
District

must

a week,

to m o n e t a r y

to m o n e t a r y

managers

deposits

and

level

banks

time—

given

Certainly

over

there

Gigstad

compile

Paulette Karas

in

deposits

constructed.

of

of

econometric

the v a r i a t i o n

^Robert
support

the

(bank)
the

been

necessary

to w h i c h

as

II.

Of

the

of

intensively

to b a n k e r s

variability,

is,

periods

has

trend.

adjustment

corporate

variability

concern.

of

extent

That

however,

concern

affects

deposit

to

stability.

longer,

greater

Long-run

it

short

relatively

growth

immediate

since

concern

all,

their

is

over

studied

at

variability

decisions

of m o r e

INTRODUCTION*

the

this

rigorous
trend

(also

is

them

holding

paper

model
not

to

easily

ad h o c ) short-term

extensive

prepare

in

programming

for

company

analysis.
status

and

banks.
[6],

[7].

O
A
a

ratings
of

recent

significant
and

interest




article

those
to

[1]

found

discriminator
rated

that

long-run

between

banks

inadequate.

Thus

regulators

also.

deposit

receiving
long-run

variability

adequate

was

regulatory

variability

may

be

2

models,

we

can

reasonable

to

Studies

do
of

determinants
deposits.

age

of

their

of

the

accounts

is

This,

their

must

Considerations

sectors

It

will

is

have

to

the

deposits

to b a n k s .

tively

less

longer

periods,

finding
a

extends

In
found
tant

one

that

of

model




this

it

their

structures

in

of

the

for

that

a non

where

of m a r k e t
[4]

the

more

it

seems

must

have

it

is

of

related

do

not

deposit
on

structure
that

periods,

over
the

and

types

to

ownership.

deposit
us

for

banks

various

variability

of

supply

experience
over

periods.
size

long-run

among

deposit

is m e a s u r e d

absolute

governments

accounts.

conditions

shorter

deposit

other

distribution

large

percent­

government

long-run
and

of

than

payments,

that

concern

variability

variability

greater

likely

be

effects

reports

breakdown

a higher

making

to

primary

volatile

with

direction

that

the

ownership

banks

purpose

Thus,

variability when

long

the

found

se q u i t u r , since when

ownership

appreciable

have

are much

opposite

unlikely

higher

and

necessarily

of

If

of
rela­

relatively
K a u f m a n ’s

the b a n k may

be

variability.
of

short-run
rate

of

variables.

can

also

demand
deposits

According

considerably more
result

is

deposit

quite

bank

governments

is

not

variability

thought

somewhere.

need

growth

explanatory

experienced

go

to v e r y

study
the

from

deposits

by

Kaufman

but

the

course,

effects

deposit

determinant

owned

of

any

relative

of

sometimes

flows

variability

variability.

size

deposits

show

deposit

government

deposits

payments

Overall

short-run

it

variability.
down

extrapolate

so.

Because

deposits,

those

to

to b e

IPC

draw

try

be

deposit
and

variability

average

to h i s

results,

variability

of

expected

obtain.

to

account

deposits.
This

[5],

size were

faster
In

Murphy

a

growing

impor­
banks

long-run

conjecture

probably

3

reflects
of

the nature

new banks,

instability.
economic

in

an

Rapid

growth

a

the

account

flow

long-run
As

with

structure

out

economic

of

to

banks

one

on

account

slowly

response.

high

then
of

the

Such

find
a

of

price

the

of

deposit

existence
Whatever

is

any

the

deposits
the

absolute




the

of

in

is

characteristic

likely

to

exhibit

of

rapidly

abrupt

the M u r p h y

smaller

in

account.

the

bank's
change

greater

improving

demographic

study

relative

This

because

terms

factor

larger

year
of

rate

as

events
in

its

rivals
one

In

is

or

the

will

not

be

important

affected

effort,

likely

swiftly

its

by

demand

and

savings

the

time

the

b a n k ’s m a r k e t ,

the

variability

likely

smaller,

deposits

example,

will

f i r m ’s m a r k e t

in

in

share.

less

obvious
and

deposits.
larger

its

to be.

relative

the market.

have

deposits

deposits

for

the

during

advertising

for

is

can

greater

rapidly

their

that

in market

while

more

of

react

growing

is m a d e

of

case we

changes

up

the m a r k e t

possible

to h a v e

to

step

long-run

level

bank

to

is

this

tend

banks

and

it

rivals

deposits,

for

causes

advertising

ceilings

of

the

firms,

influence.

at

its

structure

share

of

deposits

campaign,
the

an

to

concentrated markets

efforts

smaller

in

relating

have

leadership

overall

r i v a l ’s a d v e r t i s i n g
tively,

that

successful

chain

impossibility

larger

are

result

interdependence

next

a

may

in m o r e

promotional

might

The

of

the

phenomena

the m a r k e t

We

of

the

important

or

shares.

share

was

into

because

in

size

average,

variability

grow more

newness

growth

characteristic

themselves

on

that

year

also

rapid

context.
all

strongly

is

their

is,

hypothesize

and

of

process—

changes.

account

deposit

growth

because

circumstances,

Average

any

the

which

technological

larger

of

terms,

Thus,

effect,

a

rela­

4

Degree
ability.
pondent

A

higher

by

of

cyclical
of

rivals.

expect

to

see

to v a r i a b i l i t y .
tion

of

bank

as h o l d i n g

companies

attention
It

to

is

organization might
rather
case

than

of

or

family.

to

tax

vehicle
agency).

or

Clearly,

to

expect

apply most

forcefully

some

duced will

take

a

and

growth
of

as

of

which

with

the

seek

to

or

a

may

companies

are

dummy

the

an

affiliated with

of
accident
in

the

individual

company

insurance

organized

hypothesis

variable

it.

subordinate

the h o l d i n g

expect

more

likely

be

multibank holding

banks

form

single

of

those

pay

diminish

is m o r e
by

and

organized

historical

ownership

the

rationaliza­

are

company

controlled

(e.g.,

relationship

either

considerations

Therefore,

to

Unfortunately,

simultaneous

them.

of

concentration,

companies

This

can

fact

diversification

convenience

and we

strongly

reactions

significant

actively

ownership

the

areas.

holding

philosophy.

corres­

faster

the holding

of

offer

be more

represents

banks

vari­

a problem.

purposes

that

banks

diversification,

of

be

have

companies

facilitate

account

may

the

a matter

aspects

to

urbanized

and more

management

though,

market




for

means

deposit

will

may

account,

affiliated with

represent

legal

serve

for

areas

addition,

company movement

variability

that

geographic

companies.

are

in

should

structure
can

In

this

variables

one-bank holding

other

may

two

holding

We

on

affect

deposits

probably

variability

Diversification

and

might

affiliation

a positive

small,

we

may

urban

banks*

agents

long-run

possible

in

economic

corporate

planning.

banks

variations.

these

The

long-range

of

markets

business

higher

company

banking

correspondent

Thus,

collinearity between
Holding

of

proportion
and

population

actions
also

urbanization

services,

affected
denser

of

to b e

for
to
intro­

multibank holding

5

III.

The
Seventh
Cost
the

sample
District

Analysis
sample

deposit

in

member

is

are

Indiana,

test

to w e l l

million,

in

these

which

shows

Iowa,

Results

relationships

FCA banks

considerable
over

are

size

is

in

composed

the

1972

rather

total

with

are

and

in

160

size,

banks

deposits.

ranging
Mean

Geographically

chartered

24

of

Functional

small

$45 m i l l i o n .

banks

in Michigan,

in

is

diversity,

$1 b i l l i o n

Sixty-six
21

and

participated

median

diverse.

29

Sample,

While most

used

$32

also

to

banks

program.

$5 m i l l i o n

size

the banks

banks

actually

from under

20

of

Data,

in

Illinois,

in Wisconsin.

Twenty-

3
one

of

the

For

banks

purposes

within which
which
of

affiliated with

of

this

the b a n k

conforms

the

are

Federal

study,

(or

its

closely with
Reserve

holding

a banking market

head

that

System,

multibank

office)

usually

is

is

defined

located.

adopted

justified

is

companies.

(for

by

This

the

the

as

county

definition,

Board

same

the

of

Governors

sample

of banks)

i n [3].
The
on

dependent

deposits,

D(t)

the m e a n
scaling
above

1964

to

1971,

calculated
in

by

logarithmic

regressing
form,

on

annual
time.

observations
Algebraically,

= D ( t = 0 ) ( l + g ) fc, o r

logD(t)

Deposit

from

variable was

=

logD(t=0)

variability
of

deposits

purposes).

is

+

the

tlog(l+g).

ratio

of

(to n o r m a l i z e
The

rate

og

the

standard

for b a n k

growth

of

error

size)

deposits

of

the

multiplied
(DEPGR0)

estimate
by

is

100
g

to

(for

from

the

relations.

o

In addition, two more banks are controlled by one-bank holding com­
panies.




6

Bank
holder

size

equity

different

is m e a s u r e d
and

total

results.

significance

were

the

centration

Summary

alternatives

the

the m a r k e t

reciprocal
a

of

smaller

is n e g a t i v e .

in

is

an

a

density

same

in

(CONCE)

the

to

all

is

deposits

cases,

and

represented

Herfindahl

numbers
Market

from

dummy

represent
variable

zero

living

in persons

calculated

to

dummy

SMSA,

the p o p u l a t i o n

A

in

variables

(SMSA)

located
of

Experimentation with
revealed
levels

stock­
no

of

index.

equivalent,

shares

are

by

the

Since

the

greater

expected

calculated

numbers
con­

sign

from

the

of
1970

of D e p o s i t s .

Three
first

were

as

(DEPS).

comparable.

implies

concentration

deposits

assets

Signs

Concentration
equivalent,

by

per

1970

taking

otherwise.
in urban

square

Census

variable

degree

(HC)

of
on

The

the

value

second

areas,

mile.

urbanization were

and

Both

(PURB)

the

the

one
is

third

latter

if

tried.

the b a n k

the

is

percentage

(PDEN)

two

The

is

population

variables

were

data.
is

used

to

represent

multibank

holding

company

affiliation.
Table

I presents

Estimates

for

three

deposits,

and

time

able

is

deposit

classes
and

all

calculated

separately

^That
deposits

is,

DEPS,

under

are not

considerably,




supply

for

the

variables
each

DEPGRO,

perfect
and

only

demand.

are

the h y p o t h e s e s
shown:

In

total

deposits,

each

case,

the

corresponding

class

of

specific

to

a

class

described

above.

demand

dependent

vari­

deposits.

of

deposits

are

class.^

CONCE,
To

substitutes,

not

for

deposits.

consideration.

differ

of

for

results

deposits

savings

independent

posits
tions

of

variability

Naturally,

of

regression

in

and

SHARE

the

markets

terms

of

are

extent
for

all

that
these

specific
demand
two

concentration,

and

to

products
but

the

time

also

class
de­

may
in

condi­

7

Size
deposit
time

to

deposit

for

sizes

The
negative

of

the

the

as

the

of

exceed

loss

best
of

areas

is n o t

constituent




do
so

and

only

although

all

deposit

in

all

value
the

of

to

of

three

in

the

variability

equations
the

coefficient

equations

to

same

The
so

sizes

do

as

variable
of

the

do

as

concentration.

significance
variability.

holding

company

affiliation

in

absolute

represent

greater

deposits

urban

living

PURB

in

about

are

or

broken

rural

urban
the

is

the

Banks

into

gave

Without

variability;
down

nature

areas

same.

reported.

deposit

are

does

levels.

value.

the

performed

equation

is

levels

deposit

deposits

results

coefficients

significance

characteristics

population

exhibit

This

also

less

time

using

equivalent,

equations.

equation.

for

the

three

when

numbers

considerably,

error

results

pronounced

classes.

in

used

percent

the

three

the

variable

variables

appear

any

bank.

The
in

for

expectation

significant

experience

standard

only

to

the

consequently

vary

shares

dummy

its

of

stable

by

deposit

displays

but

quite

significant

long-run

expected.

all

(SHARE)

information,

in u r b a n
result

results,

in

classes.

t h e b a n k ’s m a r k e t ,

the

is

deposit

the

that

is h i g h l y
as

not

counter

operations

measured

however,

expected,

three

as

demand

market

is

comparable.

coefficients

larger

sign

coefficient
Of

share

of

Banks with

are

variability

in

different

of

furthermore,

deposit

Market
The

scale

is

conclude

deposits

levels

deposits,

addition,

variability,

substantially,

the

by

thus

concentration,

significant

differ

of

greater

in

We

the

rate

significance

most

sign,

by

growth,

greater

measured

equation.

growth

Higher
in

Its

influenced

leads

and

bank,

class.

The

of

the

deposit

is n o t

and

of

located
but

their

the

8

The
zero

joint

can be

judged
the

by

rejected

the h i g h

at

Of
most

of

Further

company

growth

be

sought

revealed

model.

Table

The

interaction

deposit

were

its

impact

are

able

other
now

term

classes,

companies

able

to

the

indicates

affiliation

results

ability




is

quite

is

not

to

as

judging

by

satisfactory

match

led

to

an

as

the

stability

It

of

is

expectations,

company

an

are

important

two.

the

true

effects

and

intercept

results
I

with

and

their

banks

growth

finding

trade-off
dummy

deposit

adopted

by

that

considera­
trade-off

affilation would

introduced

significant

for

affiliated with
such

for

a way

into

the

much

and

all

three

holding
to

diminish
companies

stability.
company

greater
made:
or

experiencing
with

as

inferences.

that holding

holding

can be

banks

of

a

interesting

variability;

banks

acquire

some

growth

exhibit

holding

modification.

in

variable

inferences

were

implies

between

banks

greater

companies

highly

that

This

this

II y i e l d s
and

indicates

dummies

the

to h o l d

accordingly

Thus,

that

term between

reasonable

growth

the

affiliation.

supposition

interaction

growth.

is n e g a t i v e

in

do

problem

alternative

(or h o l d i n g

model

equal

desired,

general,

that

Tables

the

organization

this

In

holding

affiliated

Two

statistic.

and

stand-alone

that

confidence

for

to m a n a g e

improve

of

are

management,

on variability.

hand,

of

the

which

variability.

form

as

slope

of

level

coefficients

variable

deposit

II p r e s e n t s

comparison

F

omitting

company

if

any

performances

this

by

and

between

only be

A

of

as w e l l

for hol d i n g

the

dummy

misspecified

long-term
tions

the

affiliation

of

whose

consideration

model was

virtually

regression

complex phenomenon.

the variables
is

all

criterion,

a very

disturbing

that

values

goodness-of-fit

explanation

may

hypothesis

high

On

affiliation

long-run

holding

deposit

company

the h o l d i n g

high

the

company

deposit

vari­

variability,

which

9

is

the

is

correct,

other

same

thing).
the

dummy

In

order

holding

variables,

company
the

became

a holding

company

second

taking

the v a l u e

1963,

zero

is n o t

otherwise."*

affiliated.

Table
HC.

(K?

of

III

and

equations
these

level

the

in

the

is

holding
growth

rates

succeeded

in

^1964
deposit

was

have




less

are

the

deposit

as

banks

while

improvement.

the

than
are

a holding

dividing

line

are

bank
and

the
after

zero

the b a n k

OLDHC

those

in

if

significant.

Also,

be

significant
While
is

This

to

the

on

and

the

the

those
as

a

that

at

the

5

derive

sign

of

significant

OLDHC*DEPGRO

the

that

impact

affiliates
the

for

II b y

than

results

implies

reducing

Because

since

rejected

slightly

coefficients

recent

NEWHC

the hypothesis

cannot

due

and

Table

larger

in

two

company

always

classes.

succeeded

the

completeness,

coefficient

variability,
this

for

terms.

The

if

otherwise,

variables

equal

More

equation.

have

zero

significance,

interactive

and variability

offered

variability.

the

three

deposit

highly

one

into

t o HC .

only

NEWHC

class.

negative,

all

chosen

is

and NEWHC

deposit

^Alternatively,
may

of

effecting

growth

of

explanations

decomposed

substituting

"worse"

individual

affiliates

on

perform

of

for

company

presented

deposit

sum

these

value

1964,

results

lack

OLDHC

was

the

dummy

and NEWHC

them

any

demand

latter

of

always

significant

are

of

the b a n k b e c a m e

none

of

for

the

on

before

coefficients

coefficients

NEWHC*DEPGRO

are

the

coefficients

percent

only

The

if

which

variable

taking

regression

III must

although
of

one

OLDHC

statistics

criteria.)

consequence

from

F

dummy

first

Both

presents

determine

affiliate

Thus

in Table

OLDHC,

the

on

to

old
of

have

not

coefficients

construction

high
yet

of

of

the

measures.

acquired

opportunity

by

for

holding

companies

diminishing

in

long-run

later
deposit

periods

10

the

dummy

variables

from NEWHC

and

that h olding
unstable,
effects

is

for

growth

along.
banks

more

The

stable,

present

variability
rewards

improving

the

growth/variability

long-run

deposit

for demand

deposits

activities
believe

earlier

per

to

dollar

growth

reduce

the

is

an

demand

deposit

advertising

to

be

drawn

however,

is

is

abnormally

destabilizing

the

[3]

to w h a t

extent

of m a n a g e m e n t ?

deposit

indicated

variability

greater

(greater

variability

to b e

can be

to

that

determinant

display

deposits),

used

control

long-run

important
that

First,

trade-off?

investigation

advertise more

of

themselves.

reducing

Since banks

tend

long-run

advertising:

for

variability

deposits.

cannot

inference,

deposit

and

subject

the

an

deductions

overall

whose

are

of

strong

rates.^

immediately

deposit

what

significant,

acquire

growth

questions

Results

demand

that

not

standing

companies

make

long-run

Second,
or

OLDHC

of h i g h e r

Two

are

one

the

of

variability

infer

subject

to

smooth

out

the

from

their

on

that

the

of

advertising

expenditures
can

level

of

promotional

banks

influence

growth

path

of
of

deposits.
A
can

significant

serve

as

changing.
business
new

The
firms

firms

identical.

be

in,
a

services

holding




may

the

company
These

service

deposits

or

existing
can

offers

are

be

the

shifting;

previous

terms

leaves

available

on which

III w i t h
all

to

HC

request.

path

are

population
moving

sells

the

to

rela­

types

its

results

of

out,

their banking

defined

regression

upon

the

examine
it

growth

conditions

clients

re-evaluating

management

in Table

affiliates

results

firms

long-run

local market

change,

prompt

and

equations

that

area may

undergoing

signal
it

of

to m a n a g e m e n t

deposit

Such

^Rerunning
bank

signal

moving

tionships.
customer

a

deviation

of

services.

include

one-

substantially

11

Return

of

deposit

indication

of

a

of

long-run

deposit

benefits

exceed

increased
Profit

the

the

Portfolio

planning,

cost

can be

argument

management's
theories

owners

of

of

the

into

of

and

may

to

changed

a

then

management

invoke
can

that

show

up

can

in

enhanced

by

diminishing

only

of

returns

sources

long-term

asset

positions,

of

funds.

short-term money

over

if

the

to m a n a g e m e n t .

deposit

funds

available

an

two ways,

of

future

as

exercise

one

increased

out

seen

control

as

of

be

environment.

or

predictability

estimates

of

that

decreasing
interests

firm.
for

firm.
must

Managers,

the

price.

Given

actual

should

the

foremost

their

desire

to

managers

can be

expected

operations
While
long-run




wherever
an

this

also

those

evaluate

and

variability
costs.

is

facilitated

Concomitantly,

market instruments

steady
to

variability

advanced

of
as

based

given

the

a group

stockholders
are,

growth

quite
of

diminish

in

upon managerial
and

frequently
or

through

are

wealth,

recognizing
are

likely

likely,

earnings

variability

The

or m a x i m u m
whether
to

growth

and

not

the b o a r d

performance.

shareholder
of

is

authority

firm,

management

difficulties

ideal,

seek

be

acting

among which

to

deposit

persons

be maximum

obvious

generate

or

substitute
and

stability.

dividends,
of

the

firm's

possible.

empirical

deposit

can

operations

continuously

achieves

criteria,

long-run

Stockholders,

excellence

management

other
In

the

directors,

standard

not

be

especially

personal

responsibility

share

it w i l l

Benefits

may

greater

of m o v i n g

control

path

reduced.

An

of

of

stockholders

performance

through

the

degree

to

long-run

accommodation

costs.

returns

accurate

its

variability,

primarily

by more

to

successful

Regardless

as

growth

examination

variability would

of

the

require

ability

of

extensive

managements
further

to

control

researching,

12

some

evidence

Given
of

the

high

deposits,

the

on

of

rewards

collinearity

however,

trade-off

rate

the

it

between

return

on

diminished

between

is

the

of

growth

difficult

two.

stockholder

variability

Table
equity

rate

of

to

examine

IV

gives

and

deposits

the

some

average

can be

and

rewards
results

officer

presented.
variability

for
of

improving

regressing

salary

on

long-

g
run

deposit
These

to
net

imply

variability
results

a

cogent

earnings
average

on

stockholder

of

model

after

is

salary

Managerial

are

and

tax
per

equity

in

by

officer.

a manner

not

to

explain

Market
ket

summary,

consistent

share,

the

rate

important
drawn

of

the

deposits,

explanatory
that

holding

deposit

variability,
inference

^Deposit
for

ponents




are

companies

organization

is

which
drawn

deposits.

quite

the

similar

is
that

and

no m e a n s

returns.

by

that

this

intended

RR

is

reserves.
rate

ad ho c

influenced

a behavioral

a

by

of

WAGE

return

model.
long-run

theory

satisfactory

growth

in

and

In
tend

tends
then

the

other
thus

around

numbers

of

holding

to

the

deposit

firm.

a

reduced

in

or

the
by,

banks

deposit-related
the

are

omitted.

urban

tenuous

following

for

demand

trend.

equivalent), firm ma r ­

adopted

company

can be built

long-run

company

acquire,

to b e

model

a

residing

addition,

holding

Results
and

all

population

variables.

variability

total

deposit

summarized

bank's

by

including

indicate

strongly

that

of

corporate

lated

(a s

are

Conclusions

finds
of

at

with

percentage

f o r m of

strong

paper

the variability

concentration

growth

be

this

is

and

capital

results

explained

however,

only

and maanagerial

equity

The

IV.
In

value

stockholder

divided

is

factors.

heuristic

of

compensation,

variability

other

areas,

affiliation

are

conclusion

can

holding
banks

company

with

high

affiliation.

The

are managed

variables

and

the

time

in

are

deposit

such

calcu­
com­

13

a way

as

to

negative
not

reduce

conclusion

influence
Some

sketchy

was

to

performance,
run

deposit




also

drawn

of

that

instability
on

deposit

indicates

size,
in

a

of

salary.

firm which

deposit

measured

long-run

Although
a

has

The

deposits,

reducing

does

long-run

profitability

significant

This

growth.

context.

for

bank

by

result,

inducement

inverse

rather
to

deposit

appears

un­

relationship

consistent

stresses, s t a b i l i t y

that management

variability.

as

variability,

officer

the

impact

the m o t i v a t i o n

presented.

average

theory

destabilizing

evidence

long-run

found with

managerial

is

deposit

variability was
related

the

with

than

diminish

a

optimum
long-

REFERENCES

[1]

Dince,

Robert

R.

and

to P r e d i c e
of
[2]

Gramley,

Lyle

E.

Herzig-Marx,

"Deposit

Kaufman,

.

George

G.

Finance
1972)
[5]

Murphy

Neil

pp.

B.

(March
[6]

Struble,

of

[7]




1

for
Bank

at

Demand
of

Banks.

1972),

Individual

Reserve

Bank

pp.

54-62.

Banks."

of

Essays

Kansas

Deposits.

Analysis
"Journal

City,

Staff

on

1962.

Memoranda

Chicago.

Variability

Financial

Commercial

______________________.

No.

Discriminant

Commercial

and

Bank

A n a l y s i s , Vol.

Size."
VII

Journal

No.

5

of

(December

2087-2096.

F r e d e r i c k M.
at

Reserve

Quantitative

1968),

Federal

of

(Spring

"A Cross-Section

Journal

Use

3,

Federal

"Deposit

and

"The
of

Advertising

Federal

C.

Adequacy

Instability

Banking.

Chayim.

76-2
[4]

James

Capital

B a n k R e s e a r c h , Vol.

Commercial
[3]

Fortson,
the

pp.

Analysis

and

Demand

Deposit

Variability."

A n a l y s i s , Vol.

Ill No.

1

87-95.

and Wilkerson,
Banks."

Carroll

Monthly

Reserve

Bank

of

"Bank

Size

and

(November-December

of

Quantitative

Kansas

1967),

H.

Review

"Deposit

Variability

(July-August

1967),

City.

Deposit
Federal

Variability."
Reserve

Bank

Monthly
of

Kansas

Review
City.

TABLE I

DEPS

Total
Deposits

Demand

Time

Deposits

Deposits

-.0001

-.0006

(.0003)

(.0006)

.0792***

DEPGRO

CONCE

SHARE

HC

.0811***
(.0073)

(.0062)

-.0190**

-.0402***

-.0265**

(.0108)

(.0121)

(.0141)

-.0022

-.0060**

-.0105**

(.0030)

(.0031)

(.0047)

-.0912

-.0348

-.1487

(.0989)

(.1099)

(.1353)

-.0003

.0039*

(.0021)

(.0020)

(.0029)

.5008**

-.3943

’1 ’

.0729***

(.0056)

.0034**

PURB

.0 0 0 6
(.0007)

-.2130

(.2187)

(.2233)

(.3072)

R2

.605

.508

.538

B?

.592

.491

.523

39.4

26.6

30.0

F

^Denotes

significance

at

10

**Denotes

significance

at

5 percent

probability

level.

***Denotes

significance

at

1 percent

probability

level.




percent

probability

level.

TABLE II

DEPS

Total
Deposits

Demand

Time

Deposits

Deposits

-.0001

-.0006

(.0003)

(.0005)
.0878***

.0848***

DEPGRO

CONCE

SHARE

HC*DEPGR0

(.0076)

(.0063)

-.0222**

-.0428***

-.0286**

(.0105)

(.0119)

(.0137)

-.0030

-.0066**

-.0112***

(.0029)

(.0031)

(.0045)

.2441*
(.1541)

(.2888)

-.0556***

-.0502***

-.0610***

(.0166)

(.0198)

(.0192)

-.0001

.0041*

(.0021)

(.0020)
-.4162**

'1'

.6680***

(.1822)

.0035**

PURB

.0786***

(.0057)

.4276**

HC

.0006
(.0007)

(.0028)

.4799**

-.2789

(.2151)

(.2164)

(.2992)

R2

.631

.527

.566

R2

.617

.508

.549

F

37.7

24.5

28.7

^Denotes

significance

at

10 p e r c e n t

**Denotes

significance

at

5 percent

probability

level.

***Denotes

significance

at

1 percent

probability

level.




probability

level.

TABLE III

DEPS

Total
Deposits

Demand

Time

Deposits

Deposits

-.0001

-.0006

(.0003)

(.0005)
.0879***

.0848***

DEPGRO

CONCE

SHARE

(.0037)

(.0064)

-.0225**

-.0424***

-.0294**

(.0106)

(.0120)

(.0139)

-.0031

-.0064**

-.0116***

(.0029)

(.0031)

(.0047)

.3554*

NEWHC*DEPGR0

0LDHC*DEPGR0

.3189

.2096

.5236

(.2277)

(.3969)

-.0691

-.0825

-.0572

(.0596)

(.0580)

(.0563)

-.0504***

-.0456**

-.0564***

(.0186)

(.0227)

(.0221)

.0001

.0042*

(.0021)

(.0020)

(.0028)

.4875**

-.4142

'1'

(.6414)

(.2509)

.0036**

PURB

.6892

(.2497)

(.4514)
OLDHC

.0785***

(.0076)

.5698

NEWHC

.0006
(.0007)

-.2682

(.2170)

(.2182)

(.3031)

R2

.635

.531

.570

R2

.613

.503

.544

F

29.0

18.9

22.1

^Denotes

significance

at

10

**D e r i o t e s

significance

at

5 percent

probability

level.

***Denotes

significance

at

1 percent

probability

level.




percent

probability

level.




TABLE IV

Dependent

Independent

variable

RR

Variables
DEPVAR

WAGE

-.0000

-.7292**

(.0039)

(.3016)

-.0008

CONCE

.1665***
(.0511)

(.0007)
LOAN/DEP

.0146

-3.844*
(1.902)

(.0249)
DEPOSITS

.0072***

-.0000
(.00001)

'1'

R2
F

Significance

based

(.0014)

.1038

16.69

(.0155)

(11.82)

-.009

.248

0.64

14.1

upon

two-tailed

tests:

^Denotes

significance

at

5 percent

level.

**Denotes

significance

at

2 percent

level.

***Denotes

significance

at

1 percent

level.