Comparisons of deposit types and implications of the financial crisis: Evidence for U.S. banks

Anthony J. Glass, Amangeldi Kenjegaliev () and Karligash Kenjegalieva

International Journal of Finance & Economics, 2022, vol. 27, issue 1, 641-664

Abstract: This paper makes three diverse contributions. First, whereas the extant literature estimates a single elasticity of substitution/complementarity from an input distance function, we calculate a range of elasticities. Second, we make a substantive contribution to the literature on bank input substitution/complementarity because somewhat surprisingly there has been very little work on this issue. Third, our analysis of the substitutability/complementarity of deposit types for U.S. banks in 2008–2015 (crisis and beyond), vis‐à‐vis 1992–2007 (pre‐crisis), is, to the best of our knowledge, the first to consider the effect of structural change on elasticities of substitution/complementarity. To account for the extent of the heterogeneity in the U.S. banking industry we estimate random coefficients models, as opposed to standard fixed parameter models. The key empirical findings are the changes in the substitutability/complementarity of the quantities of particular pairs of deposit types between the two sample periods, which points to changes in depositors' preferences across banks' deposit portfolios. To illustrate, for savings deposits, which are characterized by flexibility and liquidity, and time deposits, which are less so and thus have higher interest rates, we find significantly lower quantity complementarity in 2008–2015. From this finding, we can conclude that savings and time deposits have become more distinct, which we suggest should be reflected in banks' strategic management of their deposit portfolios.

Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1002/ijfe.2172

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wly:ijfiec:v:27:y:2022:i:1:p:641-664

Ordering information: This journal article can be ordered from
http://jws-edcv.wile ... PRINT_ISSN=1076-9307

Access Statistics for this article

International Journal of Finance & Economics is currently edited by Mark P. Taylor, Keith Cuthbertson and Michael P. Dooley

More articles in International Journal of Finance & Economics from John Wiley & Sons, Ltd.
Bibliographic data for series maintained by Wiley Content Delivery ().