Date of Award

Spring 2013

Degree Name

Bachelor of Science


Economics , Philosophy , Mathematics

First Advisor

William Butos


This paper examines factors that account for excessive reserves held by U.S banks and potential consequences of this phenomenon. This paper shall firstly establish economic rationales to address the current abnormity and then use empirical data to reinforce its argument.

As an empirical analysis, this paper firstly seeks evidence in macroeconomics and adopts time series models using U.S data. This mainly involves regressions to identify determinants of excessive reserves. Furthermore, this paper examines microeconomic factors in order to model for individual banks and unveil their motivations of holding reserves. This mainly involves panel analysis on different U.S commercial banks.

Based on the empirical evidence, this paper will further proposes solutions to current abnormity of excessive reserves.


Senior thesis completed at Trinity College for the degree of Bachelor of Science in Economics, Philosophy, Mathematics.