Deposit Funding in the Euro Area

Driesprong, M (2015) Deposit Funding in the Euro Area.

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Abstract:Developments in the Euro Area deposit funding markets, their driving factors and opportunities and difficulties for Rabobank in these markets are the three main topics of this study. We compose a dataset with annual reports of 565 Euro Area banks between 1999 and 2013 and find evidence for a renewed post-crisis importance of deposits as an important bank funding source and conclude that banks have changed their perspective on deposits. Involvement in lending activities has proven an important determinant in banks’ funding ability between 1999 and 2013. Pre-crisis bank lending activities preceded deposit funding while post-crisis banks attracted deposit funding first before granting new loans. This shift indicate higher reliance on deposit funding and a return to traditional banks activities. Moreover, this study shows that bank business models are important determinants for banks’ deposit funding ability. In answering our Research Question “What are Rabobank’s difficulties and opportunities for increased deposit funding in the Euro Area” we made four main recommendations: (i) stabilizing deposit funding variability and bank risk profile, (ii) increased involvement in lending-deposit taking activities, (iii) maintained bank size and (iv) increased deposit sourcing in Spain and Portugal.
Item Type:Essay (Master)
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:83 economics, 85 business administration, organizational science
Programme:Industrial Engineering and Management MSc (60029)
Link to this item:http://purl.utwente.nl/essays/68783
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