Monday, 28 February 2011
The presidents of the top three Portuguese private banks have been saying that they are against an eventual IMF/EU loan to Portugal. Today Ricardo Salgado, the President of Banco Espírito Santo, explained why: because, he says, a negative correlation between the bailout and deposits by residents could be observed in Greece and Ireland. The link is that the bailout reduces confidence and thus domestic savings. Is this so? Is there a literature on the determinants of domestic savings, particularly in those two countries and Portugal? Salgado's reasoning seems a bit odd to me. He certainly knows better, but I wonder whether his "feeling" would be confirmed by a proper analysis of the data.
Posted by Pedro Lains at 18:11