Does Households’ Financial Well-being Determine the Levels of Their Sight Deposits Under Turmoil?

The paper presents the results of the study aimed at verifying the significance of households’ financial well-being for the values of their sight deposits, under economic and financial destabilisation. The reason for conducting this analysis is the European Banking Authority’s stance about retail sight deposits being stable funding for credit institutions under stress, due to their transactional nature. Thus, this opinion assumes the existence of linkages between the levels of deposits and financial situation (especially incomes) of their owners. The study is based on data from the Eurosystem HFCS, which relate to households’ financial well-being in 15 euro area countries in the time of economic and financial turmoil. The regression models are used to estimate the impact of respondents’ incomes and assets (real and financial assets). The main findings are that the significance of households’ financial well-being for the allocation of deposits is heterogeneous in the countries analysed. In part of them the primary influence is assigned to the level of recent annual gross income, while in the other to net wealth accumulated by a household in the long run. From all the sight deposits declared, the most sensitive to financial situation are those placed by respondents on retirement. However, assuming the constancy of the financial situation of households in the euro area, their willingness to allocate more sight deposits appears geographically differentiated. The most willing in this regard is the Finnish population.