Bank Deposits
Overview
Bank deposits are modeled in order to predict deposit cash balances
in the future. There are several ways to do this, differing
in accuracy and complexity.
Modeling Total Balances as a Time Series
One simple approach to modeling balances is to model the total
balances as a simple
time series.
A simple way to do this is to fit the data to a
geometric brownian motion
by setting a drift and a volatility.
Modeling Accounts
A more complex and accurate measure would be to measure individual
deposit accounts. There are some complexities here. You need to
model how often an account opens, the balances over time of an account,
and how often an account closes. In effect, this becomes three separate
models.
- Modeling Balances :
An account balance is a dollar amount that varies over time.
to simplify the modeling, it is common to separate modeling
the account balances from the account closures.
- Account Closures :
Account closures are a discrete event that occurs only once
for each account. This type of event is similar to the types
of modeling used in life insurance, or in the modeling
that is done for credit default.
- Account Openings :
On the flip side to account closings are new accounts. However
the modeling is different.
