This working paper examines how monetary policy affects bank deposits in emerging and developing economies. Using data from more than 1,600 banks across 52 countries between 1996 and 2021, the authors find that higher policy interest rates are associated with slower deposit growth and wider spreads between policy rates and deposit remuneration. The findings highlight the importance of the deposit channel as a key mechanism of monetary policy transmission and underscore the need to pay greater attention to the liability side of banks’ balance sheets in both research and policymaking.
