Banking standards under the federal reserve system

Bibliographic data

Monograph

Identifikator:: 1762969653

URN:: urn:nbn:de:zbw-retromon-142432

Document type:: Monograph

Title:: Banking standards under the federal reserve system

Place of publication:: Chicago

Publisher:: A. W. Shaw Company

Year of publication:: 1928

Scope:: xxxviii, 420 Seiten

Digitisation:: 2021

Collection:: Economics Books

Usage license:: Get license information via the feedback formular.

Chapter

Document type:: Monograph

Structure type:: Chapter

Title:: Part V. General summary and interpretation

Collection:: Economics Books

168 BANKING STANDARDS 3. “. . . . the rates applying to the bulk of the loans in any given city . . . . conform in a sense to the standards of a single competitive money market.” 22 But, as pointed out above, geographical differentials in interest rates obtain and tend to persist. This fact, arrived at independ- ently by the author just quoted, is summarized as follows: 1. “The spread [in the rates] between the highest and lowest communities is from three to six times larger than the largest differential in any year between the rates charged on different types of paper averaged for all communities.” 23 2. “Banks in the cities in which Federal Reserve banks are located seem in general to have charged lower rates for loans than those in cities where there are merely branches of the system.” 24 3. The larger the volume of deposits of cities, the lower the average rate charged customers.’ The rates of interest charged customers depend, among other things, upon (1) the personal relation between banks and bor- rowers; (2) the collateral offered as security; (3) the time which a loan is to run; (4) the purpose for which it is to be used; and (5) the demand for and the supply of funds available in different parts of the country. Differentials are traceable to all of these conditions; the one most influential and operating to make the rates consistently different geographically is the finan- cial and industrial specialization characterizing different parts of the country. The market for loans, however, is national, local areas overlapping and being linked together because of the bank- ing needs of commerce and industry and of the competitive neces- sity of banks to supply them. Locally, the differentials tend to disappear; in wider areas, they tend to persist. It would be of interest, if space were available, to describe the conditions out of which an explanation of the norms, trends, cor- relations, and regression tendencies in the matter of operating expense, of net earnings, and so forth, might be sought. To do 22 Ibid., p. 810. 28 Ibid., p. 810. 24 Ibid., p. 810. See the discussion of differentials on customers’ loans by size of city, pages 364-365, above. 25 Ibid., p. 811.

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