Wealth | The chief economist dispels the delusion: the relative poverty of Finns is not caused by money lying in a bank account

Finns has long been criticized for exaggerating deposits and storing funds in bank accounts. Aktia’s chief economist Lasse Corini according to the comparison made, however, Finnish households are not an exception compared to other Nordic countries.

According to Corin, it is a fairly common perception that Finns prefer deposits to accounts instead of other investment solutions. This, in turn, would explain the lower average wealth of Finnish households compared to other Nordic countries.

However, depositing money in bank accounts in Finland is by no means exceptional compared to other Nordic countries, when the euro amount of deposits is compared to available income.

Examining the euro-denominated deposit base does not yet tell much about whether there are many or few deposits, says Corin.

Expiring at the beginning of the year, according to a comparison made by Corin, Finnish households had 89 percent of their disposable income in deposits. The reading was the lowest in the Nordic countries.

So it is not justified to claim that Finns particularly prefer deposits, Corin points out when discussing the topic in his blog post. The reasons for the weaker level of wealth of Finns are elsewhere.

Corin tells HS that he himself was surprised by how the amount of Finnish deposits in relation to income has developed over the past few years. He says that he himself thought that Finns would have an exceptionally large amount of deposits compared to others, but the comparison he made shows that the difference is not very big.

“It’s surprising that it has developed so parallel to other Nordic countries,” he says.

“When you look at Finland and Sweden and the longer-term development, the curves are startlingly close to each other.”

In Finland, the ratio of deposits to income turned downward in 2022. According to Corin, this is partially explained not only by the decrease in the number of deposits, but also by the calming down of the mortgage market.

“Much fewer new mortgages have been taken out and loan repayments have continued at the same pace as before,” he says.

The deposit stock of Finnish households peaked in the third quarter of 2022. At that time, around 127 billion euros had been deposited in bank accounts. At the end of the first quarter of the current year, the total amount of household deposits was 124 billion euros. The figures also include possible deposits of households in foreign banks.

Denmark has held first place year after year in terms of how much households have in deposits relative to disposable income.

“I don’t really know the reason, but for one reason or another, Danes like to leave a larger part of their own money in accounts,” says Corin.

At the same time, Danish households are the most prosperous in the Nordic countries. That is why it would be contradictory to think that large deposits would explain wealth differences.

The reasons for the scarcity of Finns must be sought elsewhere.

According to Corin, the most significant explanation for wealth differences is the competitiveness of the export sector. In the other Nordic countries, exports are driving Finland better.

The solution to evening out wealth differences lies in the pick-up of exports.

“Export companies are able to hire more people, pay better wages and distribute profits to their owners. Through these channels, wealth also flows into households.”