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Covid-19 And Retail Depositor Strategies In Russian Regions: Whether To Withdraw And Why?

Author

Listed:
  • Polina Popova

    (National Research University Higher School of Economics)

  • Maria Semenova

    (National Research University Higher School of Economics)

  • Vladimir Sokolov

    (National Research University Higher School of Economics)

Abstract

The COVID-19 pandemic caused a significant change in the consumption, savings, and employment patterns of individuals. This study investigates the reaction of individual bank depositors to the spread of COVID-19 from the perspective of the outflow of retail deposits and the shift in their maturity structure across Russian regions which were differently hit by the pandemic. Exploiting the cross-regional variation in COVID-19 cases in Russia from April 2020 to September 2021, we document higher deposit outflows and a shift to short-term deposits in banks that were operating in the regions with higher rates of COVID-19 relative to banks from the regions that were less affected by the pandemic. We demonstrate that these effects are driven by increased unemployment, the lack of state-financed beds in hospitals, and the lack of financial literacy. Stricter isolation measures and underdeveloped bank branch networks smoothed the withdrawals of banks deposits caused by increased number of new COVID-19 cases. The maturity shifts are additionally driven by lower regional income and increased household health expenditures. Our results do not support the alternative hypothesis that those changes were forced by market discipline mechanisms.

Suggested Citation

  • Polina Popova & Maria Semenova & Vladimir Sokolov, 2023. "Covid-19 And Retail Depositor Strategies In Russian Regions: Whether To Withdraw And Why?," HSE Working papers WP BRP 92/FE/2023, National Research University Higher School of Economics.
    • Handle: RePEc:hig:wpaper:92/fe/2023
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    References listed on IDEAS

    as
    1. Peresetsky, Anatoly, 2008. "Market discipline and deposit insurance in Russia," BOFIT Discussion Papers 14/2008, Bank of Finland Institute for Emerging Economies (BOFIT).
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    5. repec:zbw:bofitp:2008_014 is not listed on IDEAS
    6. Schoors, Koen & Semenova, Maria & Zubanov, Andrey, 2019. "Depositor discipline during crisis: Flight to familiarity or trust in local authorities?," Journal of Financial Stability, Elsevier, vol. 43(C), pages 25-39.
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    8. Barua, Suborna, 2020. "Understanding Coronanomics: The economic implications of the coronavirus (COVID-19) pandemic," MPRA Paper 99693, University Library of Munich, Germany.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    banks; retail deposits; COVID-19; Russian regions;
    All these keywords.

    JEL classification:

    • Z - Other Special Topics

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