Abstract:

The present study aimed to explore the relationship between the cost of funds and loan portfolio quality at US community banks in Illinois.  The researchers used the data that was published by: the Federal Financial Institutions Examination Council, and the Federal Deposit Insurance Corporation. They used the data listed in the call reports. They adopted a quantitative approach. They found that the bank locations, assets size, number of employees, and loan quality have a minimal impact on the cost of funds. In addition, they found that there’s a positive relationship between the number of bank employees and the average total assets. They found that there’s a negative relationship between loan quality and the average total assets. On the other hand, they found that there’s an inverse relationship between loan quality and the average total asset.