COMMERCIAL BANKS AND THE FEDERAL FUNDS MARKET: RECENT DEVELOPMENT AND IMPLICATIONS.

Several important aspects of the growth of the Federal funds market and non-bank participation in this market are examined. It is shown that the recent growth and development that has taken place has significantly influenced bank behavior and the process of bank credit determination. Additionally, it is shown that non-banks' use of Federal funds sales as an integral part of their cash management affects money demand. The implications of these recent developments in the Federal funds market for policymakers are examined. [ABSTRACT FROM AUTHOR]