Bank deposits and non-oil economic growth in Azerbaijan: Evidence from linear and nonlinear Granger causality

This study explores the relationship between bank credits, exchange rate and non-oil GDP in Azerbaijan, utilizing FMOLS, CCR and DOLS co-integration methods to the data spanning from January 2005 to January 2019. The results from the different co-integration methods are consistent with each other and approve the presence of a long-run relationship among the variables. Estimation results reveal that there is a positive and statistically significant impact of bank credits and exchange rate on the non-oil GDP in the long run for the Azerbaijani case which are in line with the expectations and with the theoretical findings discussed in theoretical framework section. This finding also indicates that a 1% increase in credit and real exchange rate increases non-oil GDP by 0.51% and 0.56%, respectively. The results of this paper are useful for the policymakers and promote the economic literature for further researches in the case of oil-rich countries.

The main component of the bank’s efficient operations is a sufficient amount of deposit resources. The sharp devaluation of the national currency, the unstable situation of banks, and a significant number of bankruptcies adversely affected the propensity of the subjects to save. In the banking sector, a critical situation has developed when depositors, having lost confidence in banking institutions, began to withdraw money from deposit accounts, and in the crisis, this issue becomes the most important, because the massive withdrawal of deposits significantly worsens the liquidity of banks. With that in mind, the purpose of the article is to consider the main trends and prospects for the savings market development in Russia.
The article analyzes the strengths and weaknesses of Russia’s savings market. Using banking statistics, similarities and differences in the savings market are shown, based on determinants such as the share of deposits in bank liabilities; the volume of deposits in national and foreign currencies, the role of leading banks; number of accounts; the volume of guaranteed deposits; and banking conditions. The study focuses on an empirical analysis of the relationship between gross savings and banking variables such as demand deposits, interest spread, and the bank capital to assets ratio. The domestic market of household savings is analyzed. This conclusion is also made visible as a result of the correlation-regression experiment.

Bank deposits are vital for the economy, serving as a primary source of funding for banks that facilitate lending, investment, consumption, and overall economic growth. This article aims to examine how oil price fluctuations and inflation, two critical macroeconomic variables, influence bank deposits in Azerbaijan, an energy-exporting country. The primary purpose is to reveal the extent to which these factors, particularly in the context of Azerbaijan’s role as an energy exporter, affect the stability and liquidity of the banking sector. Using the Autoregressive Distributed Lag (ARDL) model and Granger causality testing, the study analyzes the dynamic relationships among these variables. The findings demonstrate a significant long-term relationship and causal effects between oil prices, inflation, and bank deposits. Specifically, a one-unit increase in oil prices results in a 0.057-unit rise in bank deposits, underscoring the positive impact of oil price increases on banking sector liquidity. Conversely, a one-unit increase in inflation decreases bank deposits by 0.812 units in the long term, highlighting inflation’s detrimental effect on financial stability.