Implicit and Explicit Deposit Insurance and Depositor Behavior

Sümeyra Atmaca (), Karolin Kirschenmann, Steven Ongena and Koen Schoors

CRC TR 224 Discussion Paper Series from University of Bonn and University of Mannheim, Germany

Abstract: We employ proprietary data from a large bank to analyze how – during crisis – deposit insurance affects depositor behavior. Our focus is on Belgium where the government increased explicit deposit insurance coverage and implemented implicit deposit insurance arrangements. Estimating sorting below the respective insurance limits shows that depositors are aware of and understand these interventions. Difference-in-differences estimates show that both the increase in the explicit deposit insurance limit and the implicit deposit insurance had the intended calming effect on depositors. Close depositor-bank relationships mitigate these effects, while political trust seems to boost the general effectiveness of such government policies.

Keywords: deposit insurance; coverage limit; implicit deposit guarantee; bank nationalization; depositor heterogeneity (search for similar items in EconPapers)
JEL-codes: G21 G28 H13 N23 (search for similar items in EconPapers)
Pages: 61
Date: 2023-11
New Economics Papers: this item is included in nep-ban, nep-cba and nep-eec
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Working Paper: Implicit and Explicit Deposit Insurance and Depositor Behavior (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:bon:boncrc:crctr224_2023_476

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