Investment in Missouri banks could benefit economy

The study found that recent treasurers have shifted money to liquid out-of-state investments seeking higher returns. Additionally, the data shows the tradeoff between out-of-state returns and general revenues created by investing money in Missouri banks.

“Moving $10 million from out-of-state investments to time deposits in Missouri banks would increase general revenues by about $30,000 with current interest rates. With these funds in Missouri banks, there are greater opportunities to expand the state’s productive capacity through infrastructure and education loans, for example. So, Missouri’s citizens will realize a higher standard of living, and tax receipts from the higher base will, on average, more than offset the lower interest income,” said Haslag in a news release from the Missouri Bankers Association.

Gross state product

Haslag noted that Missouri’s gross state product would increase by $3.6 million a year.

“If this increase were translated in new jobs paying about the median annual income, we would see an additional 100 jobs added to Missouri’s economy,” he said.

MBA President Max Cook added, “If $10 million can ultimately create 100 new jobs, $1 billion could create at least 10,000 jobs. This study is a very conservative look at how Missouri money invested in Missouri banks can reap significant returns, and create jobs in our communities.”

Consequences

The study, which was funded by MBA and the Missouri Independent Bankers Association, shows that since the early 1990s, state treasurers have placed less money in Missouri banks and more in U.S. Treasury securities, repurchase agreements, commercial paper and banker acceptances.

Most of these products offer higher returns than bank time deposits and are more liquid, but the consequences of these investment decisions, according to the study, is less capital accumulation and lower state gross domestic product.

“The treasurer’s office has been chasing interest yields during a period of historic low interest returns,” said Jerry Sage, executive director of the Missouri Independent Bankers Association. “This study shows that investments in Missouri banks that reinvest in Missouri communities could ultimately make the state more money by creating jobs and expanding the tax base.”

The complete study, which is available at www.mobankers.com, shows that 20 years ago, between 50 percent and 60 percent of Missouri’s investable money was in Missouri banks.

In recent years, the amount in Missouri banks has been in the 12 percent to18 percent range.

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