Bank funding stability by non-maturing saving account Based on social banking

Abstract

Banks and financial institutions basically make money by lending money at rates higher than the cost of the money they lend. Bank funding stability and especially by non-maturing deposits, as a main part of deposits, would be one of the main challenges for banks. The purpose of this research is to address the main important factors except for the interest rate that improves funding stability base on non-maturing deposits. In this regard, a sample of this study comprises the contract and cash flow data for non-maturing deposits of nearly 10 million transactions and customer information of the biggest private bank in Iran (Mellat bank). Since deposit interest rate incentives could be the main incentive for depositors to save their deposits, our findings show that contractual rewards such as investing customer’s deposits in the CSR projects (Donation, Environmental protection, and so on), have a significant role to save more non-maturing deposits with the completely lower cost. In addition, contractual rewards could decrease deposit withdrawal and cash flow volatility which leads to more bank funding stability. In order to compensate for the work of customers, they can receive special cards and insurance.