Household deposits and consumer sentiment expectations: Evidence from Eurozone

Dimitris Anastasiou, Zied Ftiti, Waël Louhichi and Dimitris Tsouknidis

Journal of International Money and Finance, 2023, vol. 131, issue C

Abstract: This paper examines whether new refined measures of consumer sentiment expectations exert a significant effect on household deposit flows across Eurozone’s member countries. The new measures of sentiment-based expectations of consumers are constructed following a principal component analysis of selected individual answers as part of Eurostat’s consumer sentiment survey across the Eurozone’s member countries. Employing a Bayesian panel VAR model to increase the accuracy of our results, we document that a (positive) shock on consumers’ sentiment expectations triggers an imminent positive response of household deposits that gradually reverses during the next 2–3 months. This main result extends and complements traditional explanations for depositors’ behavior in the extant literature. Our results have important implications for Eurozone’s households, policymakers, central bankers, and commercial banks.

Keywords: Consumer sentiment; Household expectations; Household deposit flows; Eurozone; Bayesian Panel VAR (search for similar items in EconPapers)
JEL-codes: C25 E58 G10 G30 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jimfin:v:131:y:2023:i:c:s0261560622001784

DOI: 10.1016/j.jimonfin.2022.102775

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