Depositor Discipline in Russian Regions: Flight to Familiarity or Trust in Local Authorities?

Koen Schoors, Maria Semenova and Andrey Zubanov ()
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Andrey Zubanov: University of Wisconsin-Madison

HSE Working papers from National Research University Higher School of Economics

Abstract: We analyse whether depositor familiarity with a bank affects depositor behaviour during a financial crisis. We measure familiarity by looking for regional or local cues in the bank’s name. We measure depositor behaviour by the their sensitivity to observable bank risk (market discipline). Using 2001–2010 bank-level and region-level data for Russia, we find that depositors of familiar banks become less sensitive to bank risk after a financial crisis relative to depositors of unfamiliar banks. To check that the results are not driven by any implicit support of banks with regional cues in their names by regional governments, but indeed by familiarity bias, we interact the variables of interest with measures of trust in local governments and regional affinity. We find that the flight to familiarity effect is strongly present in regions with strong regional affinity, while the effect is rejected in regions with more trust in regional and local governments. This indicates our results are driven by familiarity and not by any implicit protection from a trusted regional or local government

Keywords: Market discipline; Bank; Personal deposit; Region; Russia; Flight to familiarity; Trust; Implicit guaranty; Regional authorities. (search for similar items in EconPapers)
JEL-codes: G01 G21 P2 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2016
New Economics Papers: this item is included in nep-ban, nep-cis and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published in WP BRP Series: Financial Economics / FE, October 2016, pages - 40

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Related works:
Working Paper: Depositor discipline in Russian regions: Flight to familiarity or trust in local authorities? (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:hig:wpaper:58/fe/2016

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