The Demands for Reserves by Commercial Banks.

The article discusses commercial banks and their demand for bank reserve requirements. This research is based on a model that is different from other stochastic methods in that banks are expected to behave differently in regard to how they behave to fluctuations in reserve requirements and how much money banks have available for investing. Bank deposits are treated like random walks and a sample equation is presented of a Bernoulli process for calculating, in dollars, the random walk steps. A set of calculations is presented to demonstrate the expected daily penalty cost, taking into account customer deposits that are in reserve.