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The price of deposit liquidity: banks versus microfinance institutions

Laureti, C. & Szafarz, A., Nov-2016, In : Applied Economics Letters. 23, 17, p. 1244-1249 6 p.

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  • The price of deposit liquidity banks versus microfinance institutions

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DOI

Using data from Bangladesh, this article finds that the liquidity premium - the difference between the interest paid on illiquid and liquid savings accounts - is higher in commercial banks than in microfinance institutions. One possible interpretation lies in the higher prevalence of time-inconsistency among the poor. The observed difference in liquidity premia could be due to poor time-inconsistent agents willing to forgo interest on illiquid savings accounts in order to discipline their future selves.

Original languageEnglish
Pages (from-to)1244-1249
Number of pages6
JournalApplied Economics Letters
Volume23
Issue number17
Publication statusPublished - Nov-2016
Externally publishedYes

    Keywords

  • Liquidity premium, present-bias, banks, microfinance, Bangladesh, SELF-CONTROL, BOOTSTRAP, POVERTY, FIELD, SIZE

ID: 57888373