Lebanon-Determinants of Commercial Bank Deposits in a Regional Financial Center

September 1, 2009

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Harald Finger, and Heiko Hesse. Lebanon-Determinants of Commercial Bank Deposits in a Regional Financial Center, (USA: International Monetary Fund, 2009) accessed December 3, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper empirically examines the demand for commercial bank deposits in Lebanon, a regional financial center. With Lebanon's high fiscal deficits financed largely by domestic commercial banks that rely on deposit funding, deposit growth is a key variable to assess government financing conditions. At the macro level, we find that domestic factors such as economic activity, prices, and the interest differential between the Lebanese pound and the U.S. dollar are significant in explaining deposit demand, as are external factors such as advanced economy economic and financial conditions and variables proxying the availability of funds from the Gulf. Impulse response functions and variance decomposition analyses underscore the relative importance of the external variables. At the micro level, we find that in addition, bank-specific variables, such as the perceived riskiness of individual banks, their liquidity buffers, loan exposure, and interest margins, bear a significant influence on the demand for deposits.

Subject: Bank deposits, Banking, Commercial banks, Cyclical indicators, Econometric analysis, Economic growth, Financial institutions, Financial services, Oil prices, Prices, Vector error correction models

Keywords: Asset quality, Bank, Bank assets, Bank data, Bank deposits, Bank level, Bank Level, Bank profit, Banking system, Commercial bank, Commercial banks, Cyclical indicators, Deposit, Deposit demand, Deposit inflow, Deposits, Factors GCC GDP growth, GCC GDP coefficient, GCC GDP growth, Global, Lebanon, Money demand, Non-resident deposit, Oil prices, Panel regressions, Regional financial center, VECM, Vector error correction models, WP

Publication Details

Pages:

21
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2009/195
Stock No:

WPIEA2009195
ISBN:

9781451873429
ISSN:

1018-5941

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