Liquidity of depository institutions and the use of federal home loan bank advances

Abstract

Depository institutions must properly manage their liquidity to meet daily cash needs, to deal with a decline in the relative size of the industry, and to avoid the possibility of a bank run. Members of the Federal Home Loan Bank System can use the Advance Program to enhance their liquidity and simultaneously limit some of the interest rate risk associated with mortgage lending and mortgage related securities. This study investigates which factors influence the decision to use the Advance program and which factors influence the volume of Advances held by participating thrifts. A logistic regression analysis is used to evaluate which variables significantly impact a thrift's decision to use the FHLB Advance Program. A multiple linear regression model of thrifts with FHLB Advances measures which variables significantly affect the level of Advances held by thrift institutions. Fed Funds Borrowed .and Repo Agreements Sold was found to have a negative impact on the decision of a thrift to have FHLB Advances. Total Assets ( + ), Equity (-), Deposits Less Than $100,000 (-), and Deposits Greater Than $100,000 (-) were all found to have a significant influence on both the decision to have Advances and the volume of Advances held.

Notes

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Thesis Completion

1999

Semester

Spring

Advisor

Gilkeson, James H.

Degree

Bachelor of Science (B.S.)

College

College of Business Administration

Degree Program

Finance

Subjects

Business Administration -- Dissertations, Academic;Dissertations, Academic -- Business Administration

Format

Print

Identifier

DP0021567

Language

English

Access Status

Open Access

Length of Campus-only Access

None

Document Type

Honors in the Major Thesis

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