When Prime Depositors Run on the Banks: A Behavioral Approach

Natanael Massie (natanaelmassie2009@gmail.com) and Chaikal Nuryakin

No 201712, LPEM FEBUI Working Papers from LPEM, Faculty of Economics and Business, University of Indonesia

Abstract: This study aims to observe the relationship between withdrawal decisions and individual psychological aspects, namely time and risk preferences. 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 describe the elicited risk preferences of the aforementioned depositors, along with their preferences on how long they would keep their money deposited. We discuss relationships between their withdrawal decision, which in excessive amount could cause bank run situations, with risk and time preferences under idiosyncratic economic shocks. A cascade effect simulation is also included in our analysis.

Keywords: Withdrawal; Decision; —; Time; Preference; —; Risk; Preference; —; Bank; Run; —; Prime; Depositor (search for similar items in EconPapers)
JEL-codes: D81 G02 G21 (search for similar items in EconPapers)
Date: 2017-09, Revised 2017-09
New Economics Papers: this item is included in nep-ban, nep-cbe and nep-sea
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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https://lpem.org/repec/lpe/papers/WP201712.pdf First version, 2017 (application/pdf)

Related works:
Journal Article: WHEN PRIME DEPOSITORS RUN ON THE BANKS: A BEHAVIORAL APPROACH (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:lpe:wpaper:201712

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