Lebanon-Determinants of Commercial Bank Deposits in a Regional Financial Center
IMF Working Papers, September 1, 2009
Source details
- Canonical URL
- Lebanon-Determinants of Commercial Bank Deposits in a Regional Financial Center
Other formats
Bibliographic details
- Authors: Harald Finger, Heiko Hesse
- Published: September 1, 2009
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451873429.001
Research question and importance
- Examines the demand for commercial bank deposits in Lebanon, a regional financial center.
- Motivating context: Lebanon's high fiscal deficits are financed largely by domestic commercial banks that rely on deposit funding; therefore, deposit growth is a key variable to assess government financing conditions.
Main empirical findings — macro level
- Domestic macroeconomic determinants significant in explaining deposit demand:
- Economic activity
- Prices
- Interest differential between the Lebanese pound and the U.S. dollar
- External factors also significant:
- Advanced economy economic and financial conditions
- Variables proxying the availability of funds from the Gulf
- Time-series analyses indicate the relative importance of external variables:
- Impulse response functions underscore the influence of external variables.
- Variance decomposition analyses underscore the relative importance of the external variables.
Main empirical findings — micro (bank-level) determinants
- Bank-specific variables significantly influence deposit demand:
- Perceived riskiness of individual banks
- Liquidity buffers
- Loan exposure
- Interest margins
Methods and analytical approach
- Econometric techniques employed include:
- Vector error correction models (VECM)
- Panel regressions
- Impulse response functions
- Variance decomposition analyses
- Keywords and methodological tags in the study: asset quality, bank data, bank profit, deposit demand, deposit inflow, non-resident deposit, VECM, panel regressions
Policy-relevant implications (as implied by findings)
- Monitoring of deposit growth is critical for assessing government financing conditions due to reliance on domestic bank funding.
- Both domestic macroeconomic management (inflation, growth, interest differentials) and external conditions (advanced economies, Gulf funding availability) matter for deposit dynamics.
- Bank-level supervision and soundness (risk profiles, liquidity buffers, loan exposure, interest margins) are important for stabilizing deposit bases.
Lebanon-Determinants of Commercial Bank Deposits in a Regional Financial Center — Harald Finger, Heiko Hesse; IMF Working Papers 2009, 195 (2009).
Content in this bundle
- 4. Key Time Series