Question

Go to the St. Louis Federal Reserve FRED database, and find data on the total assets of all commercial banks (TLAACBM027SBOG) and the total assets of money market mutual funds (MMMFFAQ027S). Transform the commercial bank assets series to quarterly by adjusting the Frequency setting to “Quarterly.” Calculate the percent increase in growth of assets for each series, from January 2000 to the most recent quarter available. Which of the two financial intermediaries has experienced the most percentage growth?

Short answer

Total assets of commerical banks has increased by 300%; Total assets of money market mutual funds has increased by 207%.

The highest percentage growth has been seen in commerical banks.

Step-by-step solution

Step 1. Introduction 

The data obtained can be shown below as:

Date	Commercial bank	Mutual funds
2000-01-01	5641.3966	1696149
2021-10-01	22569.5604	5205455

Step 2. Explanation

The percentage increase in the rate of assets can be obtained using the formula:

$$\begin{gathered} \frac{Currentperiod-baseperiod}{baseperiod}\times 100 \\ =\frac{\$(22,569.5604-5,641.3966)billions}{\$5,641.3966billions}\times 100 \\ =300\% \end{gathered}$$

So, total assets of all commerical banks have experienced a growth of 300%.

Now, the rate of growth in total assets held by money market mutualfunds can be obtained as,

$\frac{\$(5,205,455-1,696,149)millions}{\$1,696,149millions}\times 100=206.9\%$

So,total assets of all money market mutual funds have increased by 206.9%.

It is clearly evident that the commerical banks have experienced higher growth rate at 300% between first quarter of year 2000 and fourth quarter of year 2021.