The deposit financing gap: Another Dutch disease

In the last two decades the Netherlands have experienced an increase in
real-estate prices, accompanied by an increase in mortgages and a marked
decline in household savings. As a consequence banks are faced with a
large retail funding gap: outstanding mortgage debt is insufficiently
matched by retail deposits, whereas other funding possibilities of banks
have increasingly been constrained - also due to their large foreign
exposures.
In this paper we argue that traditional macroeconomic models cannot
analyse this phenomenon appropriately since they lack a proper model of
the financial sector and underestimate the potential for interactions
between the monetary and the real sphere. We present a stock-flow
consistent approach developed by Godley and Lavoie as a valuable
alternative to traditional and new Keynesian macroeconomic models and we
use this approach to analyse the deposit financing gap for the
Netherlands.