加入 getAbstract 阅读摘要

Hidden Cost of Better Bank Services

加入 getAbstract 阅读摘要

Hidden Cost of Better Bank Services

Carefree Depositors in Riskier Banks?

Federal Reserve Bank of New York,

5 分钟阅读
5 个要点速记
音频和文本

看看什么内容？

Research indicates that banks that offer excellent customer service also carry poor-quality loans.

自动生成的音频
  • 0.5×
  • 0.75×
  • 1×
  • 1.25×
  • 1.5×
  • 1.75×
1×
自动生成的音频

Editorial Rating

8

Qualities

  • Analytical
  • Innovative
  • Overview

Recommendation

Many banks in search of deposits to fuel their lending offer depositors expanded ATM networks, more branches, extended hours and other amenities. Generous customer-service practices secure funding at a lower cost to banks; however, an unsettling trade-off emerges. Economists Dong Beom Choi and Ulysses Velasquez explain the paradoxical relationship between broad service options and poor loan quality in this groundbreaking research report. getAbstract highly recommends this academic but insightful study to financial professionals and bank depositors.

Summary

Some banks in the United States use customer deposits primarily to fund their loans. For small banks – those with assets below $1 billion – 70% of their liabilities (a 1995–2014 average) were deposits from customers in their local areas. Executives at banks that rely on deposits use them as a low-cost, stable funding source to generate profitability through lending. These banks align their organizational strategies to attract more deposits by offering customers benefits such as expanded ATM access, convenient branches and hours, and a greater number of employees.

Since they want to realize mainly “transactional or...

About the Authors

Economist Dong Beom Choi and senior analyst Ulysses Velasquez work at the Federal Reserve Bank of New York.

Comment on this summary