Banks' Demand for Excess Reserves
Bibliographic Data
| ID | 10109734 |
|---|---|
| Authors | Peter A Frost (corresponding author) |
| Year | 1971 |
| Volume | 79 |
| Issue | 4 |
| Pages | 805-825 |
| Publication date | 1971-07-01 |
| Open Access | No |
| Type | ARTICLE |
| Venue | Journal of Political Economy (JOURNAL) |
| Journal identifiers | ISSN: 0022-3808 • E-ISSN: 1537-534X |
| Publisher | University of Chicago Press (PUBLISHER • US) |
| DOI | 10.1086/259789 |
| OpenAlex | W4235232502 |
| Language | EN |
| Citations received | 2 |
| References cited | 3 |
A bank's demand function for excess reserves is derived using inventory theory. In the model, banks hold excess reserves as a means of reducing the cost of meeting their reserve requirements in a world in which they are faced with random reserve flows and transaction costs. The resulting demand curve is kinked at very low interest rates (estimated to be between 0.3 and 0.5 percent for the Treasury bill rate). This kinked demand curve offers an explanation of the large accumulation of excess reserves during the 1930s that compares favorably with alternative hypotheses
Bank reserves · Business · Central bank · Citation · Demand curve · Economics · Excess reserves · Frost (temperature · Geography · Interest rate · Library science · Meteorology · Microeconomics · Monetary economics · Monetary policy · Natural resource economics · Reserve requirement · Treasury · Banking stability, regulation, efficiency · Computer Science · Economic theories and models · Economic Theory and Policy · Global Financial Crisis and Policies · History · Monetary Policy and Economic Impact
| Citations per year | 0.1 |
|---|---|
| Citation span | 2006 - 2018 (13) |
| Highly cited | No |