Large Excess Reserves in the United States: A View from the Cross-Section of Banks
by Huberto M. Ennisa and Alexander L. Wolmana
Bank reserves in the United States increased dramatically
at the end of 2008. Subsequent asset purchase programs in 2009
and 2011 more than doubled the quantity of reserves outstanding.
We study the cross-sectional distribution of reserves in
that period, and the relationship between holdings of reserves
and other components of banks’ balance sheets. We find that
reserves were widely distributed, increasing the liquidity position
of many banks which, at the same time, were far from facing
tight capital constraints. Our findings have implications for
assessing the importance of large quantities of excess reserves
for monetary policy.
JEL Codes: G21, E44, E58.
Full article (PDF, 39 pages, 2079 kb)
a Research Department, Federal Reserve Bank of Richmond