Chart, bank deposits : alert on businesses cash flow

(Source Bank Of Thailand, table FI_CB_012_S3)

Deposits (in commercial banks) of businesses : outstanding values in billions THB per month and % of growth year on year.

Deposits = time deposits, saving deposits and demand deposits.

I wrote last month, about the same chart : “are businesses under cash flow stress ?” With a question mark.

The data for september have been published. It seems that the alert is confirmed.

depositsep1

We can see an unusual (and scary I believe), pattern : 4 consecutive months of slow decline.

What’s going on ?

Here are a few hypothesis :

1-businesses are euphoric, the situation is so good, full of opportunities, that they’re not afraid to tap into their cash on hand to invest… 😉
2-businesses put their money… outside commercial banks (under the mattress or in foreign banks, or they invest in gold, equities, etc.) 😉
3-businesses face a cash flow stress : because the economic conditions are worsening : they sell less and/or their costs increase and/or banks cut their credit lines and/or they face defaults of payment from their own customers…

It smells bad.

And what about the individuals ?

depositsep2

It goes up again ! How to read this ? Well, as usual, many factors could explain this.

My theory : the drop this summer was linked to the oil/inflation crisis. But the upward pattern is linked to fears I think. Individuals are hoarding cash, instead of buying stuff, because they’re afraid (economic downturn, political crisis, both getting stronger).

We all know or feel (now) that tomorrow will be worse.

The implacable recession’s machinery has maybe started to poison people’s mind…

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