A new study, “Dynamics of Yield Gravity” co-authored by Dr. Dan Geller and Professor Nahum Biger, shows that banks can no longer count on higher interest rates alone to attract term deposits during times of economic slowdown. This finding will require changes in the pricing models of deposits and liquidity management of banks.

The Dynamics of Yield Gravity was validated by a double-blind peer review of two international organizations of economics and finance research; the International Conference on Business and Economic Development, and the International Conference on Economics, Finance and Management Outlooks.

The study shows that the main factor impacting the ability of yield to attract balances (gravitational pull) is the level of money anxiety of consumers. When money anxiety is lower, the gravitational pull of yield is greater, which is why the “orbiting” deposits balances are closer to the magnetic field of yield. Conversely, when money anxiety is higher, the gravitational pull of yield is weaker and the “orbiting” deposit balances are farther away from the magnetic field of yield.

The Dynamics of Yield Gravity was validated by a double-blind peer review of two international organizations of economics and finance research, the International conference on Business and Economic Development and the International Conference on Economics, Finance and Management Outlooks.