The Impact of Unconventional Monetary Policies on the Stocks of Bank Deposits: Evidence at an Aggregate Level in the Euro Area

Abstract

Due to the severity and persistence of the global financial crisis started in 2007, central banks all over the world have adopted Unconventional Monetary Policies (UMPs), including negative policy rates, longer-term refinancing operations and large-scale purchases of financial assets. In this study, by referring to a time-series regression analysis with Newey-West correction, we evaluate the impact of UMPs implemented by the Eurosystem over the period 2008-2019 on the stocks of euro area banks’ deposit from households and non-financial corporations. The analysis of the effects of UMPs on the stocks of banks’ deposit represents a particularly innovative aspect of this research, where most of the scientific literature focuses on deposit interest rates. Our results suggest that the UMPs conducted by the Eurosystem have had a significant positive impact on euro area bank deposits, with particular reference to the relationship between Longer-term refinancing operations and Household overnight deposits, as well as between Securities held for monetary policy purposes and deposits from Households (total deposits) and from Corporates (overnight deposits).