Growth in bank deposits could fuel more lending

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The amount of money set aside by banks to cover expected losses on loans and leases have returned to pre-crisis levels, and deposits are showing steady growth — meaning there’s more money available to lend, researchers at the Federal Reserve Bank of Cleveland say.

“The lower loan-loss provisions are another sign that the economy is showing signs of recovery,” the Cleveland Fed’s Kristle Romero Crotes and Sara Millington write. “Lower provisions have a downside risk, however. They leave banks exposed to future bumps in the recovery process.” Source: clevelandfed.org.