Deposit beta

How much of a change in the policy rate a bank passes on to depositors. Low betas are where net interest margin comes from.

• Banking
• Macro and rates

2 ideas that carry it

• Case studyBankingResearch

  Deposit betas kept rising after March 2023, but the run did not change their path

  The 2023 runs redistributed deposits towards the largest banks and exposed a pricing gap that already existed; they did not reprice the system.

  Any question about the 2023 banking crisis, deposit flight or the funding advantage of the largest banks.

  From Deposits and the March 2023 Banking Crisis–A Retrospective · Stephan Luck and Matthew Plosser, Federal Reserve Bank of New York (Liberty Street Economics)

• FrameworkBankingResearch

  Net interest margin is made on the deposit side, and deposit betas say how

  A bank's margin in a hiking cycle is decided by how slowly it reprices its deposits, measured as the deposit beta.

  Bank earnings, FIG coverage, and any interview that asks how rising rates affect a bank.

  From Is This Time Different: How Are Banks Performing during the Recent Interest Rate Increases Compared to 2004-2006? · Anya Kleymenova, Lori Leu and Cindy M. Vojtech, Board of Governors of the Federal Reserve System (FEDS Notes)