Community Bank Funding Is Getting Costlier and Riskier

Brendan Laliberte, W. Blake Marsh and Padma Sharma
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W. Blake Marsh: https://www.kansascityfed.org/research-staff/w-blake-marsh/

Economic Bulletin, 2023, 4

Abstract: Banks’ core funding has been under pressure since the Federal Open Market Committee (FOMC) began raising rates in early 2022. As depositors shift funds out of low-yielding savings and noninterest-bearing deposit accounts and into more lucrative alternative investments, community banks have increasingly turned to longer-maturity deposits and borrowings to finance their balance sheets. Although these funding sources allow banks to retain their asset size, they are both more expensive and potentially less stable.

Keywords: community banking; deposits; interest rates (search for similar items in EconPapers)
Date: 2023
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