Investigation of Causality between Interest Rate and Deposit Investor’s Behaviour

Ercan Özen, N. Serap Vurur, Simon Grima


There are many factors that influence investor behaviour. One of them is interest rates applied by commercial banks. The aim of this study is to investigate whether changes in interest rates have an impact on the Turkish deposit investor’s behaviour and to determine whether interest rates are the cause of deposit volume changes or not. For this purpose, deposit interest rates and monthly deposit volume data in the Turkish banking system for the period 2012 and 2018 was used. The data was tested using time series analysis. The Augmented Dickey Fuller (ADF) test was used to determine if the series is stationary and the Toda-Yamamoto Causality test was used to reveal the causality between the two data streams. Findings show that there is a causality between interest rates and deposit volume. This is in the line with McKinnon-Shaw’s Theory, suggesting that the investors increase their deposit investments when interest rates rise. These findings offer important implications for policy makers.


Investor Behaviour; Interest Rate; Deposit; Banking

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