Effect of inflation on savings deposits in Venezuela during the period 1998t1-2017t2 and proposal of an indexed financial product for savings instruments in the Venezuelan banking sector.

Abstract

This research studies the effects of inflation on Venezuelan savings deposits from the first quarter of 1998 to the second quarter of 2017 (1998Q1- 2017Q2). To perform such analysis, an endogenous variable called "Real Savings Deposits" was constructed, which was measured in three different approaches. Likewise, the variation of the National Consumer Price Index was used as an explanatory variable. However, certain control variables were added to make the model more robust. The analysis was carried out using multiple regression models. The results suggest that inflation had a negative impact on savings deposits in the period 1998Q1-2017Q2, regardless of the measure used for that variable. As a result, a financial product is proposed that indexes the savings and time deposit accounts of the Venezuelan banking sector to the evolution of the devaluation of the national currency against the U.S. dollar. Likewise, it ensures a return due to the minimum interest rates required. According to the experts interviewed, the implementation of such a product would protect the purchasing power of the public's savings, would increase the financial margin of the banking institutions, as well as the interest rate the financial margin of banking institutions, as well as the rate of intermediation and the level of competitiveness. In turn, it would generate value for society, the economy, and the health of the banking system.