9 Jun, 2021

U.S. Banks to business… stop depositing cash

Turns out banks can’t make money off hoards of cash if businesses aren’t borrowing that same cash. If I were currently running a business and I’m flush with cash there is virtually no risk to borrowing cash for operations. Interest rates are very low which would allow a business to invest its cash and still profit off the difference between investment income and loan interest.

Still, I’m old enough where banks not wanting a depositor’s cash is weird.

U.S. companies are holding on to billions of dollars in cash. Their banks aren’t sure what to do with it.

When the coronavirus pandemic hit last year, corporate executives rushed to raise money. Banks have been holding that cash ever since, and because companies are reluctant to borrow from them, they can’t turn it into income-generating loans. That has weighed on banks’ profit margins, and some have started pushing corporate customers to spend the cash on their businesses or move it elsewhere.

Wall Street Journal

About : Kevin Bae

%d bloggers like this: