Analysis of Investment Account Among Tennessee Banks, 1945-1966

The purpose of this study was to determine the changes in the investment account of the Tennessee banks and study the underlying causes of variations and trends in the behavior of investment account management.

The data for the study was obtained from statistics compiled by the Department of Finance, The University of Tennessee, The Federal Deposit Insurance Corporation and Federal Reserve Banks publications were the other major source of data. The study was restricted to the analysis of data for the period 1945-1966.

In the analysis of data, the following relationships were observed:

1. Size of the investment account had been declining relative to total bank assets.

2. Size of the investment account had an inverse relationship to the size of banks.

3. Country banks had relatively larger investment accounts.

4. State and local bonds were claiming an increasing proportion of the investment account, whereas the share of U.S. government securities was declining.

5.Average length of maturities was declining during the period.

The observed changes in the management of the investment account were traced to a more dynamic asset management, increased profit conscious banks, changes in market structure of the debt instruments, the deposits and the loans.