Relationship between inflation and bank deposits for the period of 2018-2022. case study: Centenary Rural Development Bank

Abstract

This study examines the relationship between inflation and bank deposits in Centenary Rural Development Bank Uganda. The empirical study is based on the threshold regression models estimated using the panel data of the bank deposits and consumer price indices over the 2018-2022 period. Using bank deposits, consumer price index (CPI) and bank interest rates, the results provide strong evidence of the inflation-threshold effect in the relationship between inflation and the bank deposits. We find that inflation has a positive effect on Demand deposits, Time deposits for 6-9 months and time deposits for >12 months. Furthermore, inflation has no effect on the amount deposited by people into saving accounts. We also notice that people are not really into time deposits however much earning they are. Therefore, the findings would be useful to bank management to encourage people to invest in time deposits.