The Impact of Interest and Inflation Rates on Deposits Behavior of Banks: The Case of Egypt

Abstract

This paper examines the impact of interest and inflation rates on deposits' behavior of banks and investigates the factors influencing the impact of interest and inflation rates movements on deposits' behaviors of banks in Egypt within the period 2000-2018. Using secondary data for the quarterly time series collected from the Statistical Bulletins published by the Egyptian Central Bank. The ARDL methodology and ARCH & GARCH models are used. The results indicate that the volatility of interest rate is not associated with the deposits' behavior of banks in the local and foreign currencies. Furthermore, the results reveal that inflation rate volatility is positively associated with the deposits' behavior in the local and foreign currencies of banks. It is recommended to examine the deposits' behavior according to different types of deposits.