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- Title
A NOTE ON COMPENSATORY BALANCE REQUIREMENTS.
- Authors
HELLWEG, DOUGLAS
- Abstract
This article focuses on compensatory balance requirements. The article's goal is to demonstrate that, by eliminating compensatory balance requirement, a bank can enlarge its own earning while at the same time reducing the effective rate of interest paid by the borrower. This also means that a reduction or elimination of compensatory balance requirements represents a movement to a superior position from the standpoints of the bank and the borrower if the criteria of superiority are solely an increase in the interest income of the bank and a decrease in the effective interest rate paid by the borrower.
- Subjects
COMPENSATORY balances; INTEREST rates; BANKING industry; BANK loans; CORPORATE banking; INVESTORS
- Publication
Journal of Finance (Wiley-Blackwell), 1961, Vol 16, Issue 1, p80
- ISSN
0022-1082
- Publication type
Article
- DOI
10.1111/j.1540-6261.1961.tb02795.x