People withdraw deposits from banks in Azerbaijan

People withdraw deposits from banks in Azerbaijan
# 20 November 2008 15:55 (UTC +04:00)
Baku. Vahab Rzayev – APA-Economics. As of November 1, the amount of deposits held in banks by individuals reached AZN 1 784 million, up 22.2% on early this year and up 34.3% on a year ago, said the National Bank of Azerbaijan.
The amount of deposits declined in October for the first time in 21 months. The monthly drop was 5% or AZN 94.7 million, about two years after a 10% or AZN 84.2 million decline in January, 2007.
Although it is not a bank run, there may be several reasons behind withdrawals.
First, inflation is too high in Azerbaijan and annual rate reached about 22% at the end of October. Although money incomes of the population increased by 35.7% during this period, it is not correct to guess that the rise in income is equally distributed among the people.
As a result, those who didn’t get a rise in their take-home pay or who can hardly cover the living expenses stopped saving money and began to use their savings.
The coincidence of the bank withdrawals and global financial crisis is not accidental.
That is to say, reports about bankruptcy of financial institutions around the world have psychological effect on Azeri people.
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