Economics Graduate with Focus on Finance & Data

Thanks, but No Thanks: A Microsimulation of BAföG Eligibility and Non-Take-Up

Authors: Alexander Eriksson Byström, María Sól Antonsdóttir

Institution: DIW Berlin, The German Socio-Economic Panel (SOEP)

Paper No.: 1226

Published: July 2025

While the body of literature on the non-take-up of public aid has grown substantially in recent years, a notable gap remains in the literature of non-take-up rates for student aid programs, where research is still extremely limited. This paper examines the non-take-up rate of Germany’s federal student aid program BAföG by creating a microsimulation based on data from the German Socio-Economic Panel for the period 2007–2021. Using the outcome of our microsimulation, we estimate three specifications of binary choice models to examine how individual characteristics relate to take-up decisions. Our findings indicate that non-take-up has increased over the past decade, with an average rate of approximately 60% for our study period. Several factors contribute to this pattern. Students who expect only a small award are much more likely to forgo BAföG, while those who are more familiar with the programme, for example through a sibling who has already claimed, tend to have lower non-take-up rates. We also observe notable regional differences as students from East Germany are more likely to apply than those from West Germany, which may reflect differing attitudes toward state support. Age and partnership status are also associated with higher non-take-up, whereas we do not find evidence that behavioural traits such as risk preference, patience, or impulsiveness play a substantial role.

Keywords: Non-take-up, microsimulation, SOEP, Student aid, student loans, BAföG, education funding

Deposit Rate Competition in the Swedish Banking Market: A Comparison of Major and Niche Banks

Authors: Alexander Eriksson Byström, Viktor Dahl

Published: July 2024

This study investigates the effectiveness of the monetary transmission mechanism in the Swedish banking sector by examining how interest rate changes between 2018 and 2023 influenced deposit rates offered by large banks versus niche banks. The research evaluates whether smaller banks provide more attractive deposit rates and explores the role of the Swedish deposit guarantee scheme in reducing the perceived risk premium for depositors. Given the risk-free nature of deposits up to 1,050,000 SEK, variation in deposit rates becomes particularly noteworthy. The findings also point to possible redistributional effects, as older individuals may face higher search costs and less digital access, potentially leading them to accept less favorable rates. The study contributes to a better understanding of structural pricing differences in the Swedish retail banking market.

Keywords: deposit rates, banking competition, monetary policy, Sweden, niche banks, interest rates, financial behavior, redistribution