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Currency Shifts as a Market Discipline Device: The Case of the Russian Market for Personal Deposits

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  • Maria Semenova
  • Andrey Shapkin

Abstract

In developing economies, which rely considerably on the dollar and euro, changes in the currency structure of bank deposits may be strategic and may work as an additional market discipline mechanism. This study sheds light on this currency shifts mechanism in the Russian market for personal deposits. Using data on 900 banks for 2005–2015, we show that less risky banks demonstrate higher growth in the share of deposits denominated in foreign currency (FX), even when the exchange rate volatility component is extracted. The shifts are supported by the quantity-based mechanism as more reliable banks enjoy higher FX deposit growth.

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  • Maria Semenova & Andrey Shapkin, 2019. "Currency Shifts as a Market Discipline Device: The Case of the Russian Market for Personal Deposits," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 55(10), pages 2149-2163, August.
  • Handle: RePEc:mes:emfitr:v:55:y:2019:i:10:p:2149-2163
    DOI: 10.1080/1540496X.2018.1562890
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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G01 - Financial Economics - - General - - - Financial Crises
    • P2 - Economic Systems - - Socialist Systems and Transition Economies

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