Persistently high inflation can affect banks in various ways as monetary policy tightening and macroeconomic changes occur. This article compares lending and bank performance during the stagflation periods of the 1970s and recent high inflation with a focus on the effects on deposits. Robust deposit growth in the 1970s suggests that banks were actively seeking deposits, while in 2021 to 2022, banks generally were flush with deposits as a result of varying pandemic support programs. The differences between the two periods illustrate the importance of considering broader macroeconomic conditions when analyzing the effects of inflation on banks.
Last Updated: November 19, 2025