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A Test of the Impact of Branching on Deposit Variability

Published online by Cambridge University Press:  19 October 2009

Louis H. Lauch  and
Neil B. Murphy
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Extract

Deposit variability in banking has received substantial attention in recent empirical studies [1], [2], [3], [4], [5], and [7], Most of these efforts have been cross-section analyses of the determinants of variability. However, the impact of branching on deposit variability has not been tested in any of these studies. Wacht suggests that branching could reduce deposit variability substantially, especially if geographical dispersion could be achieved through relaxing interstate restrictions on branching [6]. In this paper, Wacht's suggestions will be subject to empirical testing for one thrift institution located in a major eastern metropolitan area. In Section I, the test methodology is presented. Data sources and empirical results are discussed in Section II, while the study is summarized and the implications for future research are discussed in Section III.

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , Volume 5 , Issue 3 , September 1970 , pp. 323 - 327
Copyright
Copyright © School of Business Administration, University of Washington 1970

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References

[1]Chairnoff, H., “Deposit Variability: A Banker's Headache,” Business Review, Federal Reserve Bank of Philadelphia, September 1967.Google Scholar
[2]Fraser, D. R., “A Note on Deposit Stability,” Business Review, Federal Reserve Bank of Dallas, March 1967.Google Scholar
[3]Gramley, L.E., “Deposit Instability at Individual Banks,” Essays on Commercial Banking, Federal Reserve Bank of Kansas City, 1962.Google Scholar
[4]Murphy, N.B., “A Cross-Section Analysis of Deposit Variability,” Journal of Financial and Quantitative Analysis, III, March 1968.CrossRefGoogle Scholar
[5]Rangarjan, C., “Deposit Variability in Individual Banks,” National Banking Review, IV, September 1966.Google Scholar
[6]Wacht, R.F., “Branch Banking and Risk,” Journal of Financial and Quantitative Analysis, III, March 1968.Google Scholar
[7]Wilkerson, C.H., “Deposit Fluctuations at Individual Banks” (Thesis, Stonier Graduate School of Banking, Rutgers University, 1966).Google Scholar