Interaction between decentralized financial services and the traditional banking system: A comparative analysis

Q1 Social Sciences

Banks and Bank Systems Pub Date : 2024-04-22 DOI:10.21511/bbs.19(2).2024.05

S. Frolov, Maksym Ivasenko, Mariia Dykha, Iryna Shalyhina, Vladyslav Hrabar, Veronika Fenyves

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Abstract

This paper investigates the interaction between decentralized financial services and the traditional banking system by building VAR models, conducting Granger causality tests, building impulse response functions, and performing variance analysis. To implement the model, banking indicators of the USA, India, and Great Britain were selected: the volume of commercial and industrial loans, interest rate, consumer price index, total liabilities and capital of banks, aggregate deposits, federal funds rate (for the USA), and repo rate (for India). The study examined central bank data of the specified countries from July 2018 to January 2024 with the TVL indicator, which measures the sum of all assets locked in DeFi protocols. The results of the impulse response function (IRF) for countries demonstrate different interactions between TVL and bank indicators. The US response to TVL shocks demonstrates a stimulative monetary policy, with significant Fed rate reductions and increased commercial lending to boost economic activity. In contrast, India’s monetary stimulus, marked by declining repo rates and growth in banking sector liabilities and deposits, aims to enhance economic resilience. The UK, however, adopts a conservative monetary approach, with sharp bank rate increases and mixed lending and deposit responses, prioritizing financial stability. Analysis across these nations highlights different impacts of financial indicators on TVL. In the US, the evolving relationship between TVL and bank indicators reflects the financial system’s complexity. India’s sensitivity to monetary policy, credit conditions, and inflation significantly influences TVL. In the UK, central bank decisions, particularly the bank rate, play a crucial role in financial market dynamics. AcknowledgmentThe authors appreciate the assistance in the preparation of the article provided by the University of Debrecen Program for Scientific Publication and the János Bolyai Research Scholarship of the Hungarian Academy of Sciences.

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分散式金融服务与传统银行系统之间的互动：比较分析

本文通过建立 VAR 模型、进行格兰杰因果检验、建立脉冲响应函数和进行方差分析，研究了分散金融服务与传统银行体系之间的互动关系。为实现该模型，选取了美国、印度和英国的银行业指标：工商业贷款额、利率、消费价格指数、银行总负债和资本、存款总额、联邦基金利率（美国）和回购利率（印度）。研究利用 TVL 指标（衡量锁定在 DeFi 协议中的所有资产总和）对指定国家 2018 年 7 月至 2024 年 1 月的央行数据进行了检验。各国的脉冲响应函数（IRF）结果显示了 TVL 与银行指标之间不同的相互作用。美国对 TVL 冲击的反应表现为刺激性货币政策，大幅降低美联储利率并增加商业贷款以促进经济活动。相比之下，印度的货币刺激政策以回购利率下降、银行业负债和存款增长为标志，旨在增强经济韧性。而英国则采取保守的货币政策，大幅提高银行利率，混合贷款和存款反应，优先考虑金融稳定。对这些国家的分析凸显了金融指标对 TVL 的不同影响。在美国，TVL 与银行指标之间不断变化的关系反映了金融体系的复杂性。印度对货币政策、信贷条件和通胀的敏感性极大地影响了 TVL。在英国，中央银行的决策，尤其是银行利率，对金融市场的动态起着至关重要的作用。鸣谢作者感谢德布勒森大学科学出版计划和匈牙利科学院亚诺什-博尔耶研究奖学金为本文的撰写提供的帮助。

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来源期刊

Banks and Bank Systems Social Sciences-Law

CiteScore

2.60

自引率

0.00%

发文量

审稿时长

11 weeks

期刊介绍： The journal focuses on the results of scientific researches on monetary policy issues in different countries and regions all over the world. It also analyzes the activities of international financial organizations, central banks, and bank institutions. Key topics: -Monetary Policy in Different Countries and Regions; -Monetary and Payment Systems; -International Financial Organizations and Institutions; -Monetary Policy of Central Banks; -Organizational Structure, Functions and Activities of Central Banks; -State Policy and Regulation of Banking; -Bank Competitiveness; -Banks at the Financial Markets; -Bank Associations and Conglomerates; -International Payment Systems; -Investment Banking; -Financial Risks and Risk Management in Banks; -Capital and Ownership Structure, Bankruptcy and Liquidation, Mergers and Acquisitions of Banks; -Corporate Governance and Goodwill; -Personnel Management in Banks; -Econometric, Statistical Methods; Econometric Modeling of Bank Activities; -Bank Ratings.