Finance and Financial Management Commons^™

Quarter-End Effects In Banks: Preferred Habitat Or Window Dressing?, Vladimir Kotomin, Drew B. Winters

Faculty Publications - Finance, Insurance, and Law

Allen and Saunders (1992) document abnormal behavior of bank assets and liabilities at the turn-of-the-quarter and attribute it to window dressing by banks. Using different methods we re-visit bank turn-of-the-quarter balance sheet activity. We also examine quarter-end changes in the effective fed funds rates and fed funds rate standard deviations. We confirm the presence of turn-of-the-quarter activity on bank balance sheets and in the fed funds market. However, we conclude that the turn-of-the-quarter effects are more consistent with customer preferred habitats than window dressing.