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

26 Pages Posted: 7 Sep 2016

See all articles by Maria Semenova

Maria Semenova

National Research University Higher School of Economics

Andrey Shapkin

Sberbank Srednerussky Head Office

Date Written: September 6, 2016

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.

Keywords: Market discipline, Personal deposits, Currency shifts, Russia

JEL Classification: G21, G01, P2

Suggested Citation

Semenova, Maria and Shapkin, Andrey, Currency Shifts As a Market Discipline Device: The Case of the Russian Market for Personal Deposits (September 6, 2016). Higher School of Economics Research Paper No. WP BRP 57/FE/2016, Available at SSRN: https://ssrn.com/abstract=2835325 or http://dx.doi.org/10.2139/ssrn.2835325

Maria Semenova (Contact Author)

National Research University Higher School of Economics ( email )

Myasnitskaya street, 20
Moscow, Moscow 119017
Russia

Andrey Shapkin

Sberbank Srednerussky Head Office ( email )

8 B Andronievskaya UL
MOSCOW, 109544
Russia

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