South Korea New-Business Savings Deposit Rate

KRDEPRATE is the raw monthly series recorded without transformation, the average interest rate applied to savings deposits newly accepted during the reference month, expressed in percent per annum. The quantity is an interest rate, namely the price that equates consumption surrendered today to income received later, measured on the contracts written in that month rather than on balances already placed (Fisher 1930).

The new-business construction averages the rates on contracts concluded in the month in proportion to each contract's share of the amount newly placed, so the figure is a new-business-weighted mean over interest-bearing claims (Barnett 1980; Diewert 1976).

The deposits being priced are a liability of deposit-taking institutions and a financial asset of households and firms in the financial accounts. This position is defined within the moneyflows framework and the sectoral payments-and-balances scheme (Copeland 1949; Copeland 1952), realized in social accounts integrated with income and capital accounts and in sectoral balance sheets (Stone 1966; Goldsmith, Lipsey, and Mendelson 1963), and codified as a practitioner compilation (Dawson 1996).

Savings deposits are the deposit category carrying maturity and withdrawal restrictions, paying a higher rate in exchange for fewer liquidity services. The logic that combines such interest-bearing financial quantities by their user costs is established (Barnett 1980), and the bank credit that deposits fund has been compiled over long horizons and harmonized across economies (Schularick and Taylor 2012; Jordà, Schularick, and Taylor 2017).

The benchmark against which this rate is set is the short-term interest rate used as the operating target, whose target-and-corridor theory is settled (Bindseil 2004; Borio 1997). KRED stores the number exactly as recorded.

KRED transforms KRDEPRATE by none of rescaling, deflation, seasonal adjustment, or smoothing, does not re-annualize a rate already stated in per-annum terms, and describes only the measurement basis by which such a figure comes to exist.

The underlying datum is the contracted rate on each deposit, computed as the effective rate that equates the principal placed to the interest promised and then aggregated (Fisher 1930). Aggregation is a weighted average in which each contract's rate is weighted by the amount placed in that month, resting on the user-cost and index-number logic that combines interest-bearing financial quantities and on the exact and superlative index theory (Barnett 1980; Diewert 1976).

The new-business basis is what separates this series from a balance-basis rate. A balance-basis rate weights every contract still on the books by its outstanding amount and therefore reprices slowly, whereas a new-business rate holds only the contracts written in the month and so reflects changing conditions immediately, and because the two bases differ in contract composition and vintage their levels should not be read as directly comparable. This is the same stock-versus-flow distinction that separates a position from a transaction in the external accounting (Lane and Milesi-Ferretti 2001).

The amounts that supply the weights, and the place where those deposits are recorded, are delineated in flow-of-funds accounting and a full sectoral construction (Copeland 1949; Copeland 1952), and reconciled through the integrated social accounts, the national balance sheets, and compilation conventions (Stone 1966; Goldsmith, Lipsey, and Mendelson 1963; Dawson 1996).

The perimeter of the credit that deposits fund follows the bank-loan aggregate measured over long horizons (Schularick and Taylor 2012; Jordà, Schularick, and Taylor 2017). No filtering is performed, so the recorded monthly figure is the new-business-weighted rate itself.

The new-business savings deposit rate is the price actually offered in the month for postponing consumption, so it is the rate at which intertemporal allocation is currently being decided (Fisher 1930; Obstfeld and Rogoff 1995).

Because it prices new contracts rather than balances, the series reveals relatively early how changes in short-term market rates and in the policy benchmark pass through to deposit pricing. The operating target and corridor mechanism for that benchmark, and the way the overnight unsecured rate is determined around it, are established (Bindseil 2004; Borio 1997; Bartolini, Bertola, and Prati 2002; Hamilton 1996).

Deposits are financial assets that yield liquidity services together with interest, so their rate determines the user cost of monetary assets and enters directly into the weighting of monetary aggregates (Barnett 1980; Diewert 1976).

The place where the deposits carrying this rate are recorded is fixed by the sectoral accounting (Copeland 1949; Copeland 1952; Stone 1966; Goldsmith, Lipsey, and Mendelson 1963; Dawson 1996), and the finding that growth in deposit-funded bank credit shapes the macroeconomy and crisis risk is established on long-run data (Schularick and Taylor 2012; Jordà, Schularick, and Taylor 2017).

Since the gap between domestic saving and investment maps into the external position, the rate that remunerates saving is one node of that identity (Obstfeld and Rogoff 1995; Obstfeld 2012).

On the funding side the new-business deposit rate is the marginal cost of newly raised funds, so together with the rate on new lending it sets the front end of the net interest margin (Fisher 1930).

For the depositor it is the yield offered on near-riskless short-term saving, so its spread over secured funding rates and over the overnight unsecured rate governs the movement of funds between deposits and market instruments. The mechanism by which a secured rate sits below general riskless rates, and the determination and measurement of the overnight unsecured rate, are documented (Duffie 1996; Hamilton 1996; Furfine 1999).

Because savings deposits carry maturity, their rate embeds a reward for term and is therefore read through the decomposition of longer rates into expected short rates and a premium (Hicks 1939). The apparatus that summarizes the time profile of maturing cash flows in a single measure is used alongside it (Macaulay 1938).

Applying only to new business creates a repricing lag, and that lag is observed as the gap against a balance-basis rate. User-cost weighting and index-number aggregation are the frame in which the gap is interpreted (Barnett 1980; Diewert 1976).

The level and spread of the deposit rate proxy the conditions for deposit-funded credit expansion (Schularick and Taylor 2012; Jordà, Schularick, and Taylor 2017), and the financial accounts fix where that funding and lending are recorded (Copeland 1952; Stone 1966; Dawson 1996).

On the 365 monthly observations spanning 1996-01 to 2026-05, fit with a constant and trend, the unit-root battery agrees that the savings deposit rate is integrated of order one. The augmented Dickey and Fuller (1979) test, in the ARMA-consistent lag-augmented form of Said and Dickey (1984), does not reject a unit root at p = 0.2436, the nonparametric Phillips and Perron (1988) test concurs at p = 0.5164, and the KPSS test, whose null is stationarity, rejects trend stationarity with a statistic of 0.402 at p < 0.01 (Kwiatkowski et al. 1992), so the verdict is an unambiguous I(1). The GLS-detrended power escalation of Elliott, Rothenberg, and Stock (1996) and the modified information criterion of Ng and Perron (2001) are reserved for ambiguous outcomes and are not required on this clean reading.

Because the level is integrated, the mean-shift and serial-correlation diagnostics are run on the first difference, the stationary object those procedures require, since a break search or a portmanteau on an integrated level would spuriously segment and read near-unit autocorrelations (Bai and Perron 1998; Perron 1989). The multiple-break procedure of Bai and Perron (1998), computed by the dynamic-programming algorithm of Bai and Perron (2003) under BIC selection with 15% trimming and at most five breaks, selects no break in the mean of the differenced series. The mean level of monthly rate changes thus holds as a single regime across the sample, and parameter instability of the kind treated by Andrews (1993) is not found on this object.

The Ljung and Box (1978) portmanteau statistic, refining the original Box and Pierce (1970) form, is computed on the first difference and returns Q = 239.893 at lag 12 and Q = 250.546 at lag 24, rejecting the white-noise null at p = 0.000 at both rungs. Rate changes are therefore strongly persistent rather than uncorrelated, which is consistent with the stability of their mean level.

The savings deposit rate is a monthly interest-rate level with no posited low-integer seasonal component, so the seasonal-unit-root machinery of Hylleberg et al. (1990) and the Canova and Hansen (1995) seasonal-stationarity test carry no meaningful object and are deliberately not run (Beaulieu and Miron 1992; Ghysels and Osborn 2001).