Georgians prefer to save their money in the United States (US) dollar and borrow money in the national currency, the Georgian Lari (GEL).
This could explain by the instability of the Lari, which has fluctuated in value against the USD and the Euro in the last 19 months, say local banking experts.
After remaining steady the 2.1 GEL for every US dollar for the past month, the Lari peaked at 2.12 GEL. This was up from February's rate when the Lari was worth 2.5000 GEL for every US dollar.
However last week the Lari dropped and has continued to do so in the recent days. Today 1 USD cost 2.29 GEL. In the exchange booths the rate was much higher and reached 2.39 GEL.
This changing exchange rate has influenced the public and the currency they choose to borrow and save, said the National Bank of Georgia (NBG).
The larisation ratio, which measured the use of the domestic currency in the country's economy, constituted 33.07 percent of all non-bank deposits last month, revealed new data published by the bank.
In May 2016 people in Georgia deposited 13.5 billion GEL into local banks but borrowed 15.2 billion GEL, said NBG.
Current trends of bank deposits
In May 2016 the sum of deposits made in Georgia's banking sector reached 13.5 billion GEL. This was a 6.5 percent decrease, or 939.3 million GEL less month-on-month.
Also last month the volume of term deposits decreased by 312.6 million GEL, while demand deposits decreased by 626.7 million GEL.
The larisation ratio constituted 33.07 percent in total non-bank deposits last month. Meanwhile the share of the US dollar in the total volume of foreign currency denominated deposits equalled 81.4 percent and the share of the Euro equalled 15.7 percent.
How much did banks lend in May?
Commercial banks in Georgia lent 15.2 billion GEL in May 2016 to borrowers, which was 274 million GEL or 1.8 percent less compared to April 2016.
Statistics showed loans taken out in the Georgian national currency increased by 10.3 million GEL (0.2 percent) while the volume of loans in foreign currencies decreased by 284.3 million GEL or by 2.9 percent in May.
By the end of May 2016, commercial banks issued 1.6 billion GEL worth of national currency-denominated loans (two percent less compared to the previous month), and five billion GEL worth of foreign currency denominated loans (3.6 percent less) to resident legal entities.
There are 19 commercial banks in Georgia including 17 foreign-controlled banks and one branch of non-resident banks.