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Banking Analysis

goforthtl

March 02, 2015 22:45

Question on running a banking analysis: There is increased equity investment into a bank that will hold this investment and will then lend out 10 times that amount of money for small business loans and mortgages. Exact scenario: There is a $100,000,000 investment into a California bank that in turn lends out $1,000,000,000 in loans and averages a 4% interest rate on these funds. The purpose of the study is to determine the increased job creation created int he banking industry. Is the input to the analysis the $1,000,000 that is invested into the bank, the $1,000,000,000 that the bank will lend out, or the $40,000,000 in annual interest that the bank will earn?

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IMPLAN Support
March 04, 2015 21:15

Hi Kevin, Thank you for your post. To analyze the impact in the banking sector, I recommend using the $ value of the increase to the Operational spending of the bank. In your case it would be the 4% Also, Since IMPLAN is a production model, it is concerned more about what the money is being spent on. If you know what those loans are being approved and spent on; then you can allocate the dollar values to the appropriate sectors. For example if a total of $5MM of loans were being used for construction of new homes then you can apply that total of $MM to the new home construction sector. Thanks!

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