WHICH FACTORS MATTER TO DEPOSIT INSURANCE COVERAGE LIMIT? EVIDENCE FROM EMERGING MARKETS

Yiming Chang, Xiangyuan Yu (), Shangmei Zhao and Haijun Yang ()
Additional contact information
Yiming Chang: Key Laboratory of High Confidence Software Technologies (MOE), School of Electronics Engineering and Computer Science, Peking University, No. 5, Yiheyuan Road, Haidian District, Beijing, P. R. China†Research Center for Computational Social Science, Peking University, No. 5, Yiheyuan Road, Haidian District, Beijing, P. R. China‡PKU-Haier “Smart Home†Qingdao Joint Innovation Lab, Institute of Computational Social Science Peking University (Qingdao), No. 879, Lijiangxi Road, West Coast New Area, Qingdao, Shandong, P. R. China
Xiangyuan Yu: �School of Management, Swansea University, Singleton Park, Swansea SA2 8PP, Wales, UK
Shangmei Zhao: �School of Economics and Management, Beihang University, No. 37, Xueyuan Road, Haidian District, Beijing, P. R. China
Haijun Yang: �School of Economics and Management, Beihang University, No. 37, Xueyuan Road, Haidian District, Beijing, P. R. China

The Singapore Economic Review (SER), 2022, vol. 67, issue 04, 1421-1446

Abstract: This paper analyzes the effects of the household savings rate, interest rate spread and bank capital to total assets on the relationship between banks’ risk-taking and explicit deposit insurance coverage while controlling for certain macroeconomic factors, bank-level factors and political factors with data from 50 emerging markets. It is found that the U-shaped relationship between banks’ risk-taking and coverage is more apparent in countries with higher household savings rates, lower interest rate spreads or lower bank capital to total assets. The risk-minimizing coverage settings are analyzed and compared with the actual limits for emerging market economies in 2013. For emerging market countries, the effects of the household savings rate, deposit and loan spreads and banks’ capital to assets ratio should be fully considered when setting reasonable deposit insurance coverage, and their interaction with coverage should be emphasized.

Keywords: Risk-taking; deposit insurance coverage; household savings rate; interest rate spread; bank capital to total assets; emerging markets (search for similar items in EconPapers)
JEL-codes: E44 G21 G28 (search for similar items in EconPapers)
Date: 2022
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.worldscientific.com/doi/abs/10.1142/S0217590822500266
Access to full text is restricted to subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wsi:serxxx:v:67:y:2022:i:04:n:s0217590822500266

Ordering information: This journal article can be ordered from

DOI: 10.1142/S0217590822500266

Access Statistics for this article

The Singapore Economic Review (SER) is currently edited by Euston Quah

More articles in The Singapore Economic Review (SER) from World Scientific Publishing Co. Pte. Ltd.
Bibliographic data for series maintained by Tai Tone Lim ().