Author

Pius Reis

Document Type

Thesis - Open Access

Award Date

1987

Degree Name

Master of Science (MS)

Department

Economics

First Advisor

Charles E. Lamberton

Abstract

The purpose of this research is to evaluate the asset-liability management strategy and interest rate risk of banks in South Dakota from 1984 to 1986. The specific objectives of this research are: 1. To examine and analyze the trends in market interest rates from 1984-1986. 2. To evaluate and compare the asset-liability management strategy and composition of banks by asset size. 3. To evaluate and compare the asset-liability management strategy and composition of banks by crop reporting district. 4. To examine, analyze and compare interest rate risk exposure of banks by asset size and by crop reporting district. This study will focus on banks located in rural or small communities in South Dakota whose economy is mainly agriculturally based. The rationale for this is to reduce the influence of other factors such as industrial growth within the environment. This criterion can be justified by the fact that much of South Dakota is made up of many small agricultural communities with banks that are from small to medium in size. A sample of 44 banks was chosen from across the State's nine crop reporting districts. These banks were grouped by asset size into four categories: less than $10 million; $10-25 million; $25-50 million; and greater than $50 million. The asset-liability management strategy and composition of banks by size will be evaluated and compared. A Duncan multiple range test will be performed to test if the average assets and liabilities of each size group is significantly different. This test will determine if size is a major factor in asset-liability composition. Another analysis that will be presented is the asset-liability management strategy and composition of banks by crop reporting district. The crop reporting districts were grouped into four substate regions according to the major types of crops grown. The group of substate regions are: (1) North Central and Northeast CRD's; (2) East Central and Southeast CRD's; (3) Central and South Central CRD's; and (4) Northwest and Western CRD's. As stated, the regions were. formed to recognize the similarities in the types of crops grown. With each region there are similar farming practices and therefore a general pattern of capital requirements for farm operations. These differing capital needs of each region will have an effect on the risk exposure and management practices of banks across these regions.

Library of Congress Subject Headings

Interest rates -- South Dakota

Banks and banking -- South Dakota

Asset-liability management -- South Dakota

Format

application/pdf

Number of Pages

133

Publisher

South Dakota State University

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