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

Author

Listed:
  • Maria Semenova

    () (National Research University Higher School of Economics)

  • Andrey Shapkin

    () (Sberbank)

Abstract

Market discipline in the personal deposit market is of great importance for regulators. In developing economies, which rely much and are dependent on the dollar and euro, changes in the currency structure of the deposits may be strategic and work as an additional disciplining mechanism. Our study sheds light on this mechanism of currency shifts in the Russian market for personal deposits. Using data on more than 900 Russian banks for 2005¬–2015, we provide evidence that less risky banks—at least in terms of capital adequacy and liquidity—demonstrate higher growth of both the volume and the share of deposits denominated in foreign currency, even when the exchange rate volatility component is extracted. This mechanism continued working during the financial crisis of 2008–2009

Suggested Citation

  • Maria Semenova & Andrey Shapkin, 2016. "Currency Shifts as a Market Discipline Device: The Case of the Russian Market for Personal Deposits," HSE Working papers WP BRP 57/FE/2016, National Research University Higher School of Economics.
  • Handle: RePEc:hig:wpaper:57/fe/2016
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    References listed on IDEAS

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    More about this item

    Keywords

    Market discipline; Personal deposits; Currency shifts; Russia;

    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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