Effects of Interest on Demand Deposits: Implications of Compensating Balances
نویسنده
چکیده
EGISLATION is being considered which would allow depository financial institutions throughout the nation to offer to households interest-paying checking accounts, more popularly known as NOW (Negotiable Order of Withdrawal) accounts. Bankers, in general, are concerned about the effects on earnings of such a regulatory change. Several studies of NOW accounts, however, suggest that this concern may be unjustified, as only small earnings effects have been detected in areas where NOW accounts are currently permitted?
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