The deposit financing gap: another Dutch disease

Huub Meijers, Joan Muysken and Olaf Sleijpen ()
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Joan Muysken: Department of Economics, SBE, Maastricht University, CofFEE Europe, and UNU-MERIT, Maastricht, the Netherlands

European Journal of Economics and Economic Policies: Intervention, 2015, vol. 12, issue 1, 32-50

Abstract: In the last 2 decades, the Netherlands has experienced an increase in real-estate prices, accompanied by an increase in mortgages and a marked decline in household savings. As a consequence, banks are faced with a large retail funding gap: outstanding mortgage debt is insufficiently matched by retail deposits, whereas other funding possibilities of banks have increasingly been constrained – also due to their large foreign exposures. Traditional macroeconomic models cannot analyse this phenomenon appropriately as they lack a proper model of the financial sector and underestimate the potential for interactions between the monetary and the real sphere. We present a stock-flow consistent approach developed by Godley and Lavoie as a valuable alternative to traditional and New Keynesian macroeconomic models, enabling us to analyse the deposit financing gap for the Netherlands.

Keywords: stock-flow consistent modelling; retail funding gap; mortgage financing (search for similar items in EconPapers)
JEL-codes: B5 E44 E6 G21 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (8)

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Working Paper: The deposit financing gap: Another Dutch disease (2014)
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