Time series

Deposit market concentration and monetary transmission: evidence from the euro area

Retrieved on: 
Sunday, February 4, 2024

Abstract

Key Points: 
    • Abstract
      I study the transmission of monetary policy to deposit rates in the euro area with a
      focus on asymmetries and the role of banking sector concentration.
    • Moreover, the
      gap between deposit rates across euro area member states - despite being exposed to the same
      key ECB interest rates - has widened.
    • This begs the question whether deposit rates are more
      sluggish in response to both policy rate increases and cuts, and what factors might influence the
      transmission of monetary policy to deposit rates.
    • Whether banks are indeed able to adjust deposit rates asymmetrically to positive and
      negative changes in policy rates could thus well depend on how much market power they hold
      in the deposit market.
    • Arguing that market power increases in the degree of market concentration,
      I further consider whether more concentrated banking sectors set rates (more) asymmetrically.
    • The response of deposit rates in banking sectors with an average degree of concentration does
      not appear asymmetric.
    • The degree of market concentration is often pointed at, but recent evidence
      for the euro area is scarce.
    • In this paper, I provide empirical evidence on the asymmetric response of deposit rates to
      monetary policy, and relate this to the degree of concentration within a country?s banking sector.
    • Both papers
      provide empirical evidence based on US deposit markets showing that deposit rates respond
      more rigidly to upward changes in market rates than downward changes, especially so in more
      concentrated markets.
    • Recent research on euro area deposit markets,
      instead, has focused more on the transmission of negative policy rates (see e.g.
    • Whether banks are able to set deposit rates that materially differ from policy rates is affected

      ECB Working Paper Series No 2896

      4

      by market concentration: market power is assumed to increase in the degree of concentration in
      the banking sector.

    • Concentration thus appears to matter for how quickly ECB monetary policy has
      been transmitted to deposit rates across the euro area.
    • Banks thus have a motive to be
      rigid in adjusting deposit rates to a ?positive? monetary policy shock.
    • While customers are generally (and potentially rationally) inattentive, swift and substantial
      nominal deposit rate declines may trigger deposit outflows.
    • relative deposit rate = deposit rate - short term rate
      The inverse of the wedge, the relative deposit rate will allow us to see more clearly how
      the deposit rate evolves in comparison to the short-term rate.
    • This then translates to (more
      pronounced) effects on the transmission of policy to the deposit wedge, reinforcing the asymmetry discussed before.
    • More concentration would mean more rigid deposit rates (and thus an
      increase in the deposit wedge) in case of positive surprises, and more flexible deposit rates (and
      thus a decrease in the deposit wedge) in case of negative surprises (see also e.g.
    • I add an identical
      altered-linex adjustment cost for deposit rates, to capture the upward rigidity and downward
      flexibility of deposit rates as well.
    • As discussed
      previously, the deposit rate is particularly rigid in case of a positive shock, illustrating the dividend smoothing motive and bank market power.
    • Without the asymmetric adjustment cost,
      the response of the deposit rates to positive and negative changes in policy would have been
      symmetric.
    • This appears a reasonable assumption
      in general, as market concentration or market shares are slow-moving concepts.
    • 3

      Methods and data

      I study the dynamic response to an unexpected change in monetary policy on deposit rates
      in different countries in the euro area.

    • deposit rate - short-term rate), which for the sake of
      brevity I will refer to as the ?relative deposit rate?.
    • Positive IRFs for the relative deposit rate imply that
      the deposit rate has increased by more than the short-term rate, narrowing the wedge between
      the short-term rate and the deposit rate.
    • 0
      ?2

      ?2
      ?4
      ?6

      ?4
      4

      8

      12

      4

      Months

      8

      12

      Months

      Figure 9: NFC rate response - linear combination of ?0 and ?1

      Relative deposit rate at 1 month

      Relative deposit rate at 4 months

      0.0

      0
      ?1

      p.p.

    • 0
      0

      ?2
      ?1
      ?4
      4

      8

      12

      4

      8

      Months

      12

      Months

      Figure 12: NFC rate response - linear combination of ?0 and ?1

      Relative deposit rate at 1 month

      Relative deposit rate at 4 months
      2.0

      1.5

      p.p.

    • And, (2) how quickly
      households and NFCs learn about changes in monetary policy, via the deposit rate, may vary
      across the monetary union.
    • ?0 , ?1 )
      Figure A16: NFC overnight deposits, small member states

      Relative deposit rate (average)

      Relative deposit rate (interaction)

      2

      10
      5

      p.p.

    • ?0 , ?1 )
      Figure A19: NFC overnight deposits, four lags

      Relative deposit rate (average)

      Relative deposit rate (interaction)
      5

      0

      p.p.

    • ?0 , ?1 )
      Figure A28: NFC overnight deposits, small member states

      Relative deposit rate (average)

      Relative deposit rate (interaction)

      3

      5.0

      2

      2.5

      p.p.

    • ?0 , ?1 )
      Figure A31: NFC overnight deposits, four lags

      Relative deposit rate (average)

      Relative deposit rate (interaction)

      3
      2

      p.p.

Meeranda, the Human-Like AI, Welcomes Recognized Machine Learning and AI Expert, Francesca Lazzeri, Ph.D., to its Advisory Board

Retrieved on: 
Thursday, September 14, 2023

She has more than 15 years of experience in academic research, applied machine learning, AI innovation, and engineering team management.

Key Points: 
  • She has more than 15 years of experience in academic research, applied machine learning, AI innovation, and engineering team management.
  • Currently serving as the Senior Director of Data Science and AI, Cloud and AI at Microsoft , Dr. Lazzeri leads a team of skilled data and machine learning scientists.
  • "Dr. Lazzeri's contributions to the advancement of machine learning and AI technology are immense, quite well-known, and respected amongst her peers within this sector.
  • Academically, Dr. Lazzeri is an Adjunct Professor at New York's Columbia University, teaching Python for machine learning and AI students.

Meeranda, the Human-Like AI, Welcomes Recognized Machine Learning and AI Expert, Francesca Lazzeri, Ph.D., to its Advisory Board

Retrieved on: 
Thursday, September 14, 2023

She has more than 15 years of experience in academic research, applied machine learning, AI innovation, and engineering team management.

Key Points: 
  • She has more than 15 years of experience in academic research, applied machine learning, AI innovation, and engineering team management.
  • Currently serving as the Senior Director of Data Science and AI, Cloud and AI at Microsoft , Dr. Lazzeri leads a team of skilled data and machine learning scientists.
  • "Dr. Lazzeri's contributions to the advancement of machine learning and AI technology are immense, quite well-known, and respected amongst her peers within this sector.
  • Academically, Dr. Lazzeri is an Adjunct Professor at New York's Columbia University, teaching Python for machine learning and AI students.

Thales Partners with Google Cloud to Build New, Generative AI-Powered Security Capabilities

Retrieved on: 
Wednesday, June 28, 2023

Thales , a global leader in technology and security, announced a new partnership with Google Cloud to develop new data security capabilities powered by generative AI that will improve companies' ability to discover, classify and protect their most sensitive data.

Key Points: 
  • Thales , a global leader in technology and security, announced a new partnership with Google Cloud to develop new data security capabilities powered by generative AI that will improve companies' ability to discover, classify and protect their most sensitive data.
  • The partnership is part of Thales' generative AI strategy, bringing new AI-powered features and experiences to users of Thales' CipherTrust data security platform.
  • In collaboration with Google Cloud, Thales will use AI to enhance the ability of its CipherTrust Data Security Platform to discover, classify, and protect sensitive data in the cloud, enabling businesses to accelerate operational efficiency, time to compliance, and the closure of security gaps.
  • Thales (Euronext Paris: HO) is a global leader in advanced technologies within three domains: Defence & Security, Aeronautics & Space, and Digital Identity & Security.

Tencent Cloud Database Recognized by 2023 Gartner® Voice of the Customer for Cloud Database Management Systems

Retrieved on: 
Friday, June 9, 2023

Tencent Cloud has been recognized by 2023 Gartner® Voice of the Customer for Cloud Database Management Systems, evaluated as an Asia/Pacific Customers' Choice.

Key Points: 
  • Tencent Cloud has been recognized by 2023 Gartner® Voice of the Customer for Cloud Database Management Systems, evaluated as an Asia/Pacific Customers' Choice.
  • Tencent Cloud's Database Management System (DBMS) product matrix includes the distributed OLTP database Tencent Distributed SQL (TDSQL), KeeWiDB for KV store, CTSDB for Time Series, KonisGraph for Graph, and Tencent Big Data Suite (TBDS).
  • Tencent Cloud for its database has been recognized in the Gartner Magic Quadrant™, and was named as a Niche Player in the 2022 report, Gartner Magic Quadrant for Cloud Database Management Systems.
  • Gartner, Voice of the Customer for Cloud Database Management Systems, May 29, 2023.

Nozomi Networks Delivers Industry’s First AI-powered Cybersecurity Analysis and Response Engine for Critical Infrastructure

Retrieved on: 
Tuesday, May 16, 2023

SAN FRANCISCO, May 16, 2023 (GLOBE NEWSWIRE) -- Nozomi Networks Inc. , the leader in OT and IoT security, today introduced Vantage IQ™, the industry’s first AI-based analysis and response engine designed to quickly address security gaps and resource limitations in mission critical operational infrastructure.

Key Points: 
  • SAN FRANCISCO, May 16, 2023 (GLOBE NEWSWIRE) -- Nozomi Networks Inc. , the leader in OT and IoT security, today introduced Vantage IQ™, the industry’s first AI-based analysis and response engine designed to quickly address security gaps and resource limitations in mission critical operational infrastructure.
  • Teams using Vantage IQ gain fast, accurate and in-depth cybersecurity analysis that’s not possible with human analysis alone.
  • This advanced human-machine collaboration strengthens cybersecurity and resilience for critical infrastructure organizations while helping security administrators gain workload efficiencies.
  • It is available in the third quarter from Nozomi Networks and its extensive global network of channel partners.

Introducing Levitate: ‘Uplifting’ Your Metrics Woes Because Self-Management Sucks Like Gravity

Retrieved on: 
Tuesday, January 17, 2023

Storing metrics without having to worry about scale needs to be the norm.

Key Points: 
  • Storing metrics without having to worry about scale needs to be the norm.
  • Time series storage is at that point - it makes no sense to maintain your time series databases.
  • This helps identify dead time series metrics data and trim the fat according to policies the team creates.
  • In the journey to improve Reliability, you start with the fundamentals; attacking the root cause of metrics storage helps build a strong Reliability mandate.

Carry-over effects and intra-quarter GDP growth – estimates based on monthly indicators

Retrieved on: 
Friday, November 11, 2022

The annual average growth rate of real GDP for a given year partly reflects developments in the previous year.

Key Points: 
  • The annual average growth rate of real GDP for a given year partly reflects developments in the previous year.
  • The annual growth rate of real GDP for a given year is determined by the growth dynamics of real GDP not only in that particular year but also in the previous year, which results in a carry-over effect.
  • The carry-over effect captures how much annual GDP would grow if all quarterly growth rates in that year were zero.
  • The growth dynamics in the year in question can then simply be calculated as the difference between the annual growth rate and the carry-over effect.
  • [2] Similarly, the quarterly growth rate of real GDP can in part be explained by developments in the previous quarter.
  • This box presents estimates of carry-over effects and intra-quarter growth rates in recent quarters as well as the respective contributions from the main economic sectors.
  • Specifically, a measure of monthly real GDP is estimated from January to September 2022 by interpolating actual quarterly real GDP into monthly observations using monthly indicator variables.
  • [5] Quarterly and estimated monthly real GDP levels for the euro area
    (index: January 2022 = 100)

    Sources: Eurostat and ECB calculations.

  • Notes: The chart shows the profile of estimated monthly real GDP from January to September 2022 based on an interpolation of actual quarterly GDP using monthly industrial, construction and services production as explanatory variables.

InfluxDB Named a Leader in G2’s Summer Grid Report for Time Series Databases

Retrieved on: 
Thursday, June 30, 2022

InfluxData , creator of the leading time series platform InfluxDB, today announced it has been named a leader in the G2 Grid for Time Series Databases , as well a leader within the inaugural Momentum Grid Report for Time Series Databases in the Summer 2022 ratings from G2, the worlds leading business solution review platform.

Key Points: 
  • InfluxData , creator of the leading time series platform InfluxDB, today announced it has been named a leader in the G2 Grid for Time Series Databases , as well a leader within the inaugural Momentum Grid Report for Time Series Databases in the Summer 2022 ratings from G2, the worlds leading business solution review platform.
  • InfluxDB earned the highest ranking on the G2 Grid for Time Series Databases by receiving positive reviews from verified users compared to similar products in the ease of setup and user satisfaction categories.
  • InfluxDB also earned the highest scores in the Momentum Grid Report for Time Series Databases, which recognizes products with a minimum of 10 reviews and at least one year of G2 data.
  • InfluxDB is the industry-leading time series platform for developers and organizations building real-time IoT, analytics and cloud applications with time series data.

New Mendix CEO Tim Srock Sets Strategic Direction for Next Phase of Hypergrowth

Retrieved on: 
Thursday, May 19, 2022

BOSTON, May 19, 2022 /PRNewswire/ -- Mendix, a Siemens business and global leader in modern enterprise application development, recently promoted CFO Tim Srock to be the company's new CEO. Srock, who replaces co-founder Derek Roos, takes the reins at a time during which Mendix has enjoyed impressive growth in customers, partners, and geographic reach, while increasing annual recurring revenue (ARR) by more than 300% since Siemens acquired Mendix in August 2018.

Key Points: 
  • In his new role, Srock will lead the company in its next phase of hypergrowth to place Mendix and its market-leading low-code application development platform at the heart of the enterprise software stack.
  • Tim is focused on ensuring Mendix delivers the agility, the solutions, the emerging technology, and the employee- and customer-centricity that enterprises need to succeed."
  • Additionally, the Mendix ecosystem includes the Mendix Academy , App Factory , Digital Execution Practice , and an engaged community of 50 million licensed users.
  • His charter as CEO is to maintain the company's hypergrowth while positioning Mendix at the center of the enterprise software development stack.