Abstract

This paper investigates the relationship between household, managerial and economic sentiments, and bank deposits. Using UK monthly data from January 2000 to February 2018 and a sample of consumer, industrial and economic confidence indicators provided by the European Commission, this paper provides novel evidence on how sentiment affects the deposit growth and interest rates in the UK. In addition, this paper finds robust evidence regarding the impact of managerial sentiment on bond rates, LIBOR rates, and corporate deposit growth, implying that managers’ sentiments play a significant role in determining the level of business’s savings. It is also reported that household sentiment plays a significant role in shaping the households deposit growth. Moreover, economic sentiment is shown to affect the deposit growth of both households and institutions.