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Economic Analysis: Theory and Practice
 

Estimating the real rate of return on household deposits

Vol. 15, Iss. 11, NOVEMBER 2016

PDF  Article PDF Version

Received: 21 July 2016

Received in revised form: 26 August 2016

Accepted: 16 September 2016

Available online: 29 November 2016

Subject Heading: ANALYSIS OF FINANCIAL CAPITAL

JEL Classification: C10, C13, C14

Pages: 104-113

Ivanov A.P. Russian Open Academy of Transport of Moscow State University of Railway Engineering, Moscow, Russian Federation
ark@e-diva.ru

Mikhalev A.S. PAO Uralsib, Moscow, Russian Federation
alexmikhalev87@gmail.com

Importance The article investigates real rate of return on household deposits.
Objectives The aim is to consider the problems related to transformation of personal savings into investment for manufacturers.
Methods To present an algorithm for estimating the real rate of return, deposits were divided into two groups: in foreign and national currencies. For ruble-denominated deposits, the numerical algorithm of profitability was determined by the weighted average interest rate of the bank, adjusted for inflation. A similar algorithm was used to calculate the real rate of return on deposits denominated in foreign currency.
Results The study shows that under stable economy the real rate of return on bank deposits is above zero. However, during the crisis, the real rate of return is below zero except for certain peak cases of liquidity shortage causing a sharp increase in deposit interest rates.
Conclusions and Relevance The study presents factors that prevent real rate of return from permanent staying in the positive zone. Nevertheless, a bank deposit as a savings tool continues being a profitable product under stable national economy. It is worthwhile to say that there is no adequate development of alternative savings institutions in our country. On the one hand, this fact increases the importance of bank deposits for the population, on the other hand, it bears additional risk for the banking system.

Keywords: deposit, interest rate, inflation, investment

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