On June 16, 1933, President Roosevelt signed into law the banking act of 1933, Section 11 of which specified that "No bank shall, directly or indirectly, by any device whatsoever, pay an interest on any deposit which is payable on demand."

We examine the dynamics of eleven different deposit rates for a panel of over 2,500 branches of about 900 depository institutions observed weekly over ten years. We replicate previous work showing that rates are downwards-flexible and upwards-sticky, and show that a simple menu cost model can...

We examine the dynamics of eleven different deposit rates for a panel of over 2,500 branches of about 900 depository institutions observed weekly over ten years. We replicate previous work showing that rates are downwards-flexible and upwards-sticky, and show that a simple menu cost model can...

It is shown that a program of attracting the banking term deposits essentially depends on the term structure of new deposits. Solving the linear integral Volterra equations with difference kernel, it was received the explicit analytical solution for the program of attracting new deposits with an...

We show that maturity transformation does not expose banks to interest rate risk---it hedges it. The reason is the deposit franchise, which allows banks to pay deposit rates that are low and insensitive to market interest rates. Hedging the deposit franchise requires banks to earn income that is...

We show that maturity transformation does not expose banks to significant interest rate risk|it hedges it. This is due to banks' deposit franchise. The deposit franchise gives banks substantial market power over deposits, allowing them to pay deposit rates that are low and insensitive to market...