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The relative influence of price and non-price factors on short-term retail deposit quantities?

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  • John K. Ashton
  • Andros Gregoriou
  • Jerome V. Healy

Abstract

This study explores how price and non-price factors influence change in the quantity of short-term retail deposits held by depository institutions. The analysis is undertaken for a sample of UK building societies over 23 years using a disaggregated data set with a two-stage econometric procedure involving system estimators in a panel framework using seemingly unrelated regression, generalised method of moments and an ordinary least-squares fixed effects estimators to control for contemporaneous correlation and endogeneity concerns. Price factors examined include the policy or base rate and retail deposit interest rates set by individual building societies and non-price factors including the branch network and the number of deposit accounts offered by individual building societies. The cost of funds, one non-price factor and occurrence of mergers are consistently significant influences of retail deposit quantities. We conclude risk assessment of retail deposit quantity and monetary policy transmission would benefit from considering both price and non-price factors, rather than only price factors.

Suggested Citation

  • John K. Ashton & Andros Gregoriou & Jerome V. Healy, 2016. "The relative influence of price and non-price factors on short-term retail deposit quantities?," The European Journal of Finance, Taylor & Francis Journals, vol. 22(11), pages 1086-1108, September.
    • Handle: RePEc:taf:eurjfi:v:22:y:2016:i:11:p:1086-1108
    DOI: 10.1080/1351847X.2015.1019643
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    Cited by:

    1. Simona Galletta & Sebastiano Mazzù & Valeria Naciti & Carlo Vermiglio, 2021. "Sustainable development and financial institutions: Do banks' environmental policies influence customer deposits?," Business Strategy and the Environment, Wiley Blackwell, vol. 30(1), pages 643-656, January.

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