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

Author

Listed:
  • Federica Ciocchetta

    (Bank of Italy)

  • Raffaele Gallo

    (Bank of Italy)

  • Silvia Magri

    (Bank of Italy)

  • Massimo Molinari

    (Bank of Italy)

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.

Suggested Citation

  • Federica Ciocchetta & Raffaele Gallo & Silvia Magri & Massimo Molinari, 2025. "Friends or foes? Banks' deposits and digitalization during monetary tightening," Temi di discussione (Economic working papers) 1490, Bank of Italy, Economic Research and International Relations Area.
    • Handle: RePEc:bdi:wptemi:td_1490_25
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    File URL: https://www.bancaditalia.it/pubblicazioni/temi-discussione/2025/2025-1490/en_tema_1490.pdf
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    Keywords

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    JEL classification:

    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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