Many banks in search of deposits to fuel their lending offer depositors expanded ATM networks, more branches, extended hours and other amenities. Generous customer-service practices secure funding at a lower cost to banks; however, an unsettling trade-off emerges. Economists Dong Beom Choi and Ulysses Velasquez explain the paradoxical relationship between broad service options and poor loan quality in this groundbreaking research report. getAbstract highly recommends this academic but insightful study to financial professionals and bank depositors.
In this summary, you will learn
- How extensive customer-service offerings and low-cost bank funding are related, and
- How negative trade-offs result in poor loan quality and riskier assets.
About the Authors
Economist Dong Beom Choi and senior analyst Ulysses Velasquez work at the Federal Reserve Bank of New York.
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