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.
Get the key points from this report in 10 minutes.
For your company
We help you build a culture of continuous learning.
Comment on this summary
Customers who read this summary also read
ReportDid the Founding of the Federal Reserve Affect the Vulnerability of the Interbank System to Systemic Risk?
Mark Carlson and David C. Wheelock
Federal Reserve Bank of St. Louis, 2016
Federal Reserve Bank of Atlanta, 2016
International Monetary Fund
Michael Kumhof and Zoltán Jakab
Finance & Development Magazine, 2016