F109. Commercial Banking (Bankers)
Federal Reserve definition for F109 flow of funds table
The commercial banking sector comprises four groups:
- U.S.-chartered commercial banks (F.110);
- foreign banking offices in the U.S. (F.111);
- bank holding companies (F.112); and
- banks in U.S.-affiliated areas (F.113).
Credit market funds advanced by the commercial banking sector serves as an indicator of funds supplied to the domestic nonfinancial sectors.
Commercial banks are financial intermediaries that raise funds through demand and time deposits as well as from other sources, such as federal funds purchases and security repurchase agreements, funds from parent companies, and borrowing from other lending institutions (for example, the Federal Home Loan Banks).
They use the funds to make loans, primarily to businesses and individuals, and to invest in securities. U.S.-chartered commercial banks are established under regulations of a U.S. chartering authority — either the U.S. Comptroller of the Currency (for national banks) or the banking authority of one of the fifty states or the District of Columbia (for state-chartered banks).
The deposit liabilities of U.S.-chartered commercial banks are components of various monetary aggregates (measures of the U.S. money supply published by the Federal Reserve System.)
In 1998, there were 9,000 chartered commercial banks in the U.S.
In recent years, the commercial banking industry has undergone significant consolidation as a result of both the gradual removal of prohibitions on interstate banking arrangements and the growing similarity of other financial institutions to commercial banks.
At the end of 1998, there were approximately 9,000 U.S.-chartered commercial banks, down from a peak of 14,407 in 1980.
Credit market funds advanced differs from bank credit, shown in line 7, in that it excludes security credit, corporate equities, and mutual fund shares and includes customers' liability on acceptances.
