What Makes Depositors Tick? Bank Data Insights Into Households’ Liquid Asset Allocation

We use transaction-level bank data covering 2016-2024 to study household portfolio choice within a narrowly defined asset class: liquid, short-term, safe assets. These assets are virtually identical in risk, maturity, and liquidity, and balances can be shifted between them instantaneously at no cost, yet their yields differ markedly. We document that portfolio returns rise strongly with individuals' wealth: the top decile earns on average about two percentage points more than the bottom decile by favoring higher-yield assets. Nonetheless, wealthy households still leave more interest income, worth roughly 2.5 percent of their annual consumption, on the table while the median household leaves about 0.3 percent. We show that portfolio allocations react sharply to wealth changes but only modestly to interest-rate spreads—except among the richest depositors, whose responsiveness is ten times the average. Linking survey evidence to the bank data, we show that greater financial literacy and accurate inflation knowledge are associated with stronger reallocation toward high-yield accounts. We also document that during the Covid cycle, movements in aggregate shares of low-return deposits were driven mainly by wealthy savers responding to widening spreads, highlighting the importance of monetary policy decisions for banks’ funding costs and credit supply.