WHEN PRIME DEPOSITORS RUN ON THE BANKS: A BEHAVIORAL APPROACH
Natanael Waraney Gerald Massie (natanael.waraney@ui.ac.id) and
Chaikal Nuryakin
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Natanael Waraney Gerald Massie: Universitas Indonesia
Bulletin of Monetary Economics and Banking, 2020, vol. 23, issue 1, 139-152
Abstract:
This paper examines the effect of two psychological attributes, namely an individual’s risk and time preference, on withdrawal decisions. Our sample is a pool of prime depositors in Indonesia, mainly due to the country’s deposit market being heavily concentrated on such depositors. We find that most of the prime depositors are risk averse long-term depositors. The regression results show that there is a significant correlation between the decision to withdraw and individual risk and time preference in most economic shock scenarios. The study concludes that a bank-run could happen if the rupiah depreciates by approximately 27% (from Rp 13,436 to Rp 17,000) and when there is a medium or a large bank failure.
Keywords: Withdrawal Decision; Time Preference; Risk Preference; Bank Run; Bank Depositor (search for similar items in EconPapers)
JEL-codes: D81 G02 G21 (search for similar items in EconPapers)
Date: 2020
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Working Paper: When Prime Depositors Run on the Banks: A Behavioral Approach (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:idn:journl:v:23:y:2020:i:1g:p:139-152
DOI: 10.21098/bemp.v23i1.954
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