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Competing for savings: how important is creditworthiness during the crisis?

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  • Jacob Bikker
  • Dirk Gerritsen
  • Steffie Schwillens

Abstract

Interest rates on savings products vary not only across banks, but also across the accounts of individual banks. Building on a unique dataset covering the 2003-2014 period, our results show that time deposit rates reflect more closely the economic environment than bank interest rates on savings accounts do. At bank level, interest rates are significantly negatively related to creditworthiness, especially since the onset of the global financial crisis. With regard to account-specific features, we find that maturity-increasing conditions (i.e., withdrawal fees for savings accounts and product maturity for time deposits) positively influence a product's interest rate.

Suggested Citation

  • Jacob Bikker & Dirk Gerritsen & Steffie Schwillens, 2016. "Competing for savings: how important is creditworthiness during the crisis?," DNB Working Papers 493, Netherlands Central Bank, Research Department.
  • Handle: RePEc:dnb:dnbwpp:493
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    Cited by:

    1. Danielsson, Jon & Zhou, Chen, 2015. "Why risk is so hard to measure," LSE Research Online Documents on Economics 62002, London School of Economics and Political Science, LSE Library.
    2. D.F. Gerritsen & J.A. Bikker & M. Brandsen, 2017. "Bank switching and deposit rates : Evidence for crisis and non-crisis years," Working Papers 17-08, Utrecht School of Economics.
    3. Marco Hoeberichts & Ad Stokman, 2016. "Price level convergence within the euro area: How Europe caught up with the US and lost terrain again," DNB Working Papers 497, Netherlands Central Bank, Research Department.

    More about this item

    Keywords

    time deposits; savings accounts; interest rate setting; creditworthiness; liquidity; account characteristics;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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