The Determinative Factors of Deposits Behavior in Banking System in Albania (Jan 2005 – Dec 2014)
AbstractIn recent years, the financial crisis has had a global impact, affecting the performance of financial and bank indicators. However, the extent of its impact in different countries is not similar, because of the characteristics of the banking system structure and the economic situation. This paper aims to assess the impact of macroeconomic and specific banking variables in the deposits’ behavior, in the Albanian Banking System during period January 2005 - December 2014. In the theoretical aspect, a research model has been set up, based on the leading theories identified in the literature. The aim of the research was to build a model to assess how the deposits’ behavior will change in relation with risk decisions from bank management. The model includes macroeconomic and specific banking factors. Also, the effect of the impact of the crisis will be evaluated by a dichotomous variable, which aims to assess the performance of level of deposits during the crisis period (March 2008 - June 2009). In empirical terms, the study focused on understanding the impact of each factor on the decision making of the depositors. The decision making of the depositors will be expressed with the progress of total deposits, because a quantitative model was identified to analyze the data. Using quarterly data, the results of the study estimate that the deterioration of several indicators of banking or macroeconomic performance, has affected the level of deposits. Also, two most important factors that affect the level of total deposits are: the level of bank liquidity and the interest rates on deposits in foreign currency. Also, another important result is that the performance of deposits is estimated to be improved during the time of crises compared to normal period; suggesting that the effects of the crisis are shown months later in Albania banking sector. In conclusion, analyzing the level of total deposits is very important, because they are one of the main sources of funding for the banks. So, understanding the relationship bank-customer is also important in building policies in managing the effects of crisis periods. The results recommend that bank should educate depositors in understanding bank products.
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