How does deforestation lead to frequent floods and droughts?

Roots of trees in forests help in absorbing rain water which then percolates into the ground but due to deforestation water holding capacity is reduced. Movement of water from the soil surface to the ground is reduced. This results in floods as excess water will flow from banks of rivers into surrounding areas. Trees bring rainfall as they release a lot of water vapours into the atmosphere by transpiration process but due to deforestation rainfall are scanty which may lead to drought conditions.