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Deposit Insurance and Depositor Behavior: Evidence from Colombia

Nicolás de Roux () and Nicola Limodio

Documentos CEDE from Universidad de los Andes - CEDE

Abstract: We exploit a large and unexpected increase in the Colombian insurance threshold to investigate how depositors respond to higher deposit insurance. Monthly depositor-level records from a major bank show that the level and growth rate of deposits rise with higher coverage. Individuals who were fully and nearly-fully insured before the policy drive this increment. A survey of bank customers indicates that higher deposits were replenished by lowering cash and other assets. We estimate an elasticity of deposit growth to deposit insurance of 0.4%, and fi nd a similar fi gure in the United States by leveraging the 2008 increase in deposit insurance.

Keywords: Banking; Financial Regulation; Household Saving. (search for similar items in EconPapers)
JEL-codes: G21 G28 G51 (search for similar items in EconPapers)
Pages: 38
Date: 2021-02-17
New Economics Papers: this item is included in nep-ban, nep-cba, nep-fdg and nep-ias
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