Friends or foes? Banks' deposits and digitalization during monetary tightening

Federica Ciocchetta (), Raffaele Gallo (), Silvia Magri () and Massimo Molinari ()
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Federica Ciocchetta: Bank of Italy
Raffaele Gallo: Bank of Italy
Silvia Magri: Bank of Italy
Massimo Molinari: Bank of Italy

No 1490, Temi di discussione (Economic working papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: This paper analyzes whether the deposits of high digital banks (i.e. banks whose customers mainly use online money transfers), are more sensitive to changes in interest rates following the monetary tightening phase started in 2022. By relying on a difference-in-difference model estimated for the period from January 2021 to December 2023, we show that there are no significant differences between high digital and other banks in sight deposits and their rate dynamics. In the same period, in contrast, household term deposits and the related interest rates increased at a greater rate for high digital intermediaries, compared with other banks. This larger increase in household term deposits is not correlated with the main indicators of bank vulnerabilities, but it is driven by the results of ex-ante larger and more profitable high digital banks and of intermediaries with a lower initial share of household term deposits. Overall, the stronger sensitivity of high-digital bank deposits seems limited to household term deposits with no negative impact on their profitability.

Keywords: deposits; interest rates; digital banks; monetary tightening (search for similar items in EconPapers)
JEL-codes: E43 E52 E58 G21 (search for similar items in EconPapers)
Date: 2025-07
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