The Impact of Deposit Insurance on Depositor Behavior During a Crisis: A Conjoint Analysis Approach

Glenn Boyle (), Roger Stover, Amrit Tiwana and Oleksandr Zhylyevskyy ()

Staff General Research Papers Archive from Iowa State University, Department of Economics

Abstract: We investigate the effectiveness of initiating deposit insurance at the outset of a banking crisis. Using a conjoint analysis approach that allows us to consider the simultaneous impact of multiple deposit insurance attributes and various counterfactuals, we ask a multinational sample of respondents how they would view hypothetical account profiles following the failure of a large competing bank. Previous experience matters: respondents from countries without explicit deposit insurance exhibit greater withdrawal risk, suggesting that the introduction of deposit insurance during a crisis may be only partially successful in preventing bank runs. They also impose a higher deposit interest rate premium. Having a long-term bank relationship reduces withdrawal risk, as does the absence of co-insurance.

Keywords: banking crises; Conjoint analysis; deposit insurance; bank runs (search for similar items in EconPapers)
JEL-codes: G01 G21 (search for similar items in EconPapers)
Date: 2015-03-20
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Citations: View citations in EconPapers (30)

Forthcoming in Journal of Financial Intermediation

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http://dx.doi.org/10.1016/j.jfi.2015.02.001

Related works:
Journal Article: The impact of deposit insurance on depositor behavior during a crisis: A conjoint analysis approach (2015)
Working Paper: The impact of deposit insurance on depositor behavior during a crisis: A conjoint analysis approach (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:isu:genres:38656

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