Accession Number : AD0717569

Title :   Optimal Management of Bank Reserves,

Corporate Author : CENTER FOR NAVAL ANALYSES ARLINGTON VA

Personal Author(s) : Brown,George F. , Jr

Report Date : 01 AUG 1970

Pagination or Media Count : 42

Abstract : A central question of many monetary studies is the determination of the effects of various forces upon the actual supply of money in the economy. One of a number of competing monetary supply hypotheses revolves about the relationship between bank reserves and deposit creation. Recent studies have employed the techniques of inventory theory to examine the factors influencing bank credit expansion. In the present paper, the effects of various forces on the optimal expansion of credit and holding of reserves are investigated using the techniques of dynamic programming. Discussed in the paper are the effects of uncertainty about reserve losses, various types of penalty costs, costs of adjustment, uncertain future interest rates, and of various institutional structures under which the bank must operate. (Author)

Descriptors :   (*BANKING, MATHEMATICAL MODELS), (*MANAGEMENT PLANNING AND CONTROL, OPTIMIZATION), ECONOMICS, THEORY, STOCHASTIC PROCESSES, UNCERTAINTY, COSTS, TIME

Subject Categories : Economics and Cost Analysis

Distribution Statement : APPROVED FOR PUBLIC RELEASE