This paper utilizes a profit maximizing banking model to analyze sweeping behavior. Comparative statics results indicate that sweeping responds positively to increases in bank loan rates and reserve ratios and negatively to increases in the interest rate on reserves or to exogenous increases in...

A key rationale offered by the Federal Reserve for the payment of interest on reserves was to remove the incentive for banks to operate sweep accounts. Sweeping shifts funds from transactions deposits subject to reserve requirements to non-reservable deposits. This paper extends a conventional...

This paper examines the joint determination of the interest rate on demand deposits and swept funds given interest on reserves and the elimination of Regulation Q. Our model works within monopolistically competitive loan and deposit markets and incorporates sweeping from deposit accounts to...