Document Type

Master's Culminating Experience

Publication Date



This study is an econometric analysis of three consumer banking accounts from Bank One Dayton, N.A., the Total Demand account, Total Savings account and Time Deposits Account. The elasticity of demand with respect to interest rates of the savings and time deposit accounts is determined using multiple regression modeling and analysis. Other variables that are significant determinants of the balances of each account are also presented.

An analysis of the regression results for the Time Deposits Model indicates that the demand for the Bank One Dayton time deposit accounts (certificate of deposit accounts) is significantly elastic with respect to interest rate. In addition to the time deposit rate, personal income, recessionary economic periods, the unemployment rate and national small time deposit balances are all significant, positive determinants of time deposit balances.

The percentage rate difference between the savings account rate and the time deposits account rate is a significant determinant of savings account demand and in this case a better indicator of demand elasticity with respect to rate than the savings rate. The elasticity of demand for savings with respect to the savings-time deposit rate is low. Increases in personal income and decreases in the savings-time deposit rate will positively effect savings account balances.

The depositor’s demand for Demand deposit accounts is determined by factors that do not accrue interest to the account’s balances. Personal income is positively correlated with total demand balances but tax payments, recessionary periods, the spread between the time deposit and savings rate and the installment loan rate all negatively effect demand account balances. An increase in the time deposit-savings rate should encourage a flight of funds to time deposits as should a recessionary period in the economy.