This thesis presents a comparison of the loan to deposit ratios of Texas banks along the Mexican border and banks located throughout the rest of the state. Mean characteristics of the two groups (i.e. border and non-border groups) are presented. A multivariate regression model is used to examine the extent to which various operating ratios of the banks and differing economic conditions of the communities in which the banks are located help explain the loan to deposit ratios of the banks involved in this study. The model incorporates data from 1984-1989. No evidence was found to refute the hypothesis that Texas border banks have a lower loan to deposit ratio than their non-border counterparts. The evidence points to a need for developmental capital, supplied by some form of development bank.