The impact of deposit insurance on depositor behavior during a crisis: A conjoint analysis approach

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

ISU General Staff Papers 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.

Date: 2015-01-01
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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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