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Determinants of Interest Rates on Time Deposits and Savings Accounts: Macro Factors, Bank Risk, and Account Features

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  • Jacob A. Bikker
  • Dirk F. Gerritsen

Abstract

Using a novel dataset from the Netherlands' banking sector, we examine how macroeconomic, bank†specific, and account†specific characteristics affect the interest rates of banking products. Our results show that interest rates have become more sensitive to bank risk since the onset of the global financial crisis. More generally, we show that time deposits reflect more closely the economic environment than bank interest rates on savings accounts do. Interest rates on deposit products vary not only across, but also within banks (i.e., across account of individual banks). 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 A. Bikker & Dirk F. Gerritsen, 2018. "Determinants of Interest Rates on Time Deposits and Savings Accounts: Macro Factors, Bank Risk, and Account Features," International Review of Finance, International Review of Finance Ltd., vol. 18(2), pages 169-216, June.
    • Handle: RePEc:bla:irvfin:v:18:y:2018:i:2:p:169-216
    DOI: 10.1111/irfi.12143
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    Citations

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    Cited by:

    1. Dirk F. Gerritsen & Jacob A. Bikker, 2020. "Bank Switching and Interest Rates: Examining Annual Transfers Between Savings Accounts," Journal of Financial Services Research, Springer;Western Finance Association, vol. 57(1), pages 29-49, February.
    2. Fernando, Antonette, 2022. "The Role of Financial Structural Factors in Retail Rate Adjustment: Evidence from Sri Lanka," OSF Preprints gn5jp, Center for Open Science.
    3. Nesru Kasim Banke & Mekonnen Kumlachew Yitayaw, 2022. "Deposit mobilization and its determinants: evidence from commercial banks in Ethiopia," Future Business Journal, Springer, vol. 8(1), pages 1-10, December.
    4. José Carlos Teixeira & Carlos Vieira & Paulo Ferreira, 2021. "The Effects of Government Bonds on Liquidity Risk and Bank Profitability in Cape Verde," IJFS, MDPI, vol. 9(1), pages 1-23, January.
    5. Todd Messer, 2022. "Financial Failure and Depositor Quality: Evidence from Building and Loan Associations in California," International Finance Discussion Papers 1354, Board of Governors of the Federal Reserve System (U.S.).
    6. Okowa, Ezaal & Vincent, Moses Owede, 2022. "Bank Competition, Concentration and Economic Growth: A Panel Analysis of Selected Banks in the Nigeria Banking Industry," International Journal of Research and Scientific Innovation, International Journal of Research and Scientific Innovation (IJRSI), vol. 9(2), pages 73-83, February.

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