Money market funds are swelling at a time when bad news about banks is escalating, but experts disagree whether the headlines are prompting depositors to close their savings accounts.

"We are seeing a substantial amount of money going into money market funds and I think it's fair to assume some of this is investors taking their money out of bank funds," said Martha Wittbrodt, editor of IBEC-Donoghue's Money Fund Report.She also said economic uncertainty created by the gulf war inspired investors to seek a relatively safe location for their cash in money funds that invest in government securities, since money funds are not federally insured.

"I think people are concerned because of the headlines about the banking industry and in general are looking to the money market funds as maybe a little safer than having their money in the bank," said Paul Suckow, director of fixed income securities at mutual fund operator Oppenheimer Management Corp.

"Maybe they are diversifying some of that risk."

A spokesman for the Federal Deposit Insurance Corp. also said he's heard "anecdotal comments" about a possible flight from bank savings accounts, but said there's no evidence to substantiate such a trend.

Money market funds are mutual funds that pool money from individuals and institutional investors to buy short-term securities such as bank certificates of deposit, Treasury bills and corporate debt called commercial paper. They provide a steady share price of $1 and usually offer check-writing privileges.

For the week ended Jan. 9, money market funds reported a $16.7 billion increase, the largest weekly inflow in the past five years recorded by the Investment Company Institute in Washington.

A large share of the increase in money market funds - $8.8 billion - was due to institutional investors, said ICI spokesman John Collins. They invested heavily after a sharp drop in the federal funds rate, the interest on overnight loans between banks. The drop created a wide spread between the federal funds rate and the higher rates paid by some of the funds, economists said.

An Investment Company Institute spokeswoman wasn't sure the heavy infusion into the money market funds came at the expense of bank savings accounts.

"We don't always know if it's coming out of a bank or a savings vehicle or stock or stock funds. We would just have to interpret that," said Barbara Levin, an ICI spokeswoman.

Brian Mattes, vice president of mutual fund operator Vanguard Group in Valley Forge, Pa., agreed.

"The problem is if there is an increase there is really no way of knowing where the money is coming from initially," said Mattes. "It may be purely circumstantial."