Graduation Year
2025
Date of Submission
12-2024
Document Type
Open Access Senior Thesis
Degree Name
Bachelor of Arts
Department
Economics
Reader 1
Julio Garin
Terms of Use & License Information
Rights Information
© 2024 Joseph S Zhong
Abstract
Institutional investors started using bank deposits as a Leading Economic Indicator to predict stock market returns. I find that bank deposits lead stock market returns by 2 weeks at the national level. Examining the mechanism through which bank deposits affect stock market returns, existing literature postulates the Bank Deposit Lending Channel: increased bank deposits increase financial liquidity, powering and leading stock market returns. I do not find evidence for the Bank Deposit Lending Channel. In my regional analysis, I find that bank deposit behavior differs drastically between US regions. In general, regional bank deposits still lead stock market returns. In switching between a weekly and yearly analysis, I find that the relationship between bank deposits and stock market returns shifts from a positive leading relationship to a negative leading relationship.
Recommended Citation
Zhong, Joseph, "National and Regional Bank Deposits and Their Relationship to the Stock Market" (2025). CMC Senior Theses. 3759.
https://scholarship.claremont.edu/cmc_theses/3759
Included in
Finance Commons, Finance and Financial Management Commons, Portfolio and Security Analysis Commons
